Pension Overpayments

WHAT THE BILL WOULD DO

Senior Couple From Behind Looking at Front of House.

SB 266 would require cities and local governments to cover the cost of pension overpayments rather than reduce the pensions of retired public employees. Under current law, when the California Public Employees’ Retirement System finds mistakes, the retiree loses the difference and can be responsible for paying back up to three years’ worth of overpayments.

WHO SUPPORTS IT?

Public employee unions such as the California Professional Firefighters. Labor representatives say retirees living on fixed incomes should be held blameless for those mistakes.

WHO’S OPPOSED?

Some local governments and the League of California Cities. The league notes taxpayers would be on the hook for these overpayments at a time when cities and local agencies are struggling to meet their pension obligations.

WHY IT MATTERS

Former Gov. Jerry Brown championed a set of pension benefit restrictions to help tame massive unfunded liabilities. He vetoed a similar bill by Sen. Connie Leyva last year, fearing it could enable workers to inflate their pay in the final years of employment, which would help inflate their retirement checks.

GOVERNOR’S CALL

This bill passed the Legislature, but its author put a hold on it just before the legislative recess, saying she plans to keep working on it when state lawmakers return in the fall. Gov. Gavin Newsom has not commented on the bill, but the maneuver suggests he may have had a problem with it. In any case, for now, it remains a question mark.