Purpose of the Bill

The bill aims to expand and modify the coverage of the Public Employees Retirement Association (PERA) for employees of public medical facilities or governmental subdivisions that become privatized. The purpose is to ensure that these employees retain their retirement benefits after privatization.

Main Provisions

• Expanded Coverage: The bill extends retirement benefits coverage to employees of governmental subdivisions that are privatized, ensuring they can still receive benefits similar to those provided by PERA.
• Revised Withdrawal Liability: It updates the method for calculating the financial liability of privatized employers, which includes computing withdrawal liability based on the present value of accrued benefits and funding ratios.
• Reporting Requirements: The bill introduces stricter reporting rules for privatizations, requiring comprehensive annual reports detailing privatized employers and withdrawal liabilities.

Significant Changes to Existing Law

• New Subdivisions and Definitions: Several new definitions are introduced, such as "privatization," "privatized former public employee," and "withdrawal liability," to provide clarity and structure to retirement benefits following privatization.
• Certification and Calculation Process: Privatizing entities must submit documentation before privatization, allowing for calculating and settling withdrawal liabilities.
• Augmentation Interest Rates: The enhancement and restrictions of augmentation rates for deferred annuities of privatized former public employees are specified, altering how retirement benfits are calculated.
• Service and Benefits Eligibility: It modifies the eligibility criteria for early retirement and disability benefits, applying different augmentation rates based on specific conditions and timelines.

Relevant Terms

• Public Employees Retirement Association (PERA)
• Privatization
• Withdrawal Liability
• Accrued Benefits
• Governmental Subdivision
• Augmentation Rate
• Retirement Benefits
• Actuarial Calculations