County, Contra Costa County Fire Protection District, and Housing Authority employees receive retirement benefits from the Contra Costa County Employees Retirement Association (“CCCERA.”). However, Internal Revenue Code section 415 (b) puts an annual limit on the amount of retirement benefits that CCCERA may pay to a retiree, even if, but for the limitation, the retiree would have been due additional retirement benefits. Internal Revenue Code section 415 also permits an employer to adopt a replacement benefits plan to pay those benefits that the retiree has earned but CCCERA cannot pay. The County Employees Retirement Law, in Government Code section 31899.4, requires each County and District to provide a replacement benefits program for retirees whose benefits are limited by Internal Revenue Code section 415 (b). On October 24, 2006, the Board of Supervisors adopted the required Replacement Benefits Plan. The Plan applies to the County, the Contra Costa County Fire Protection District, and the Housing Authority. The Plan covers all employee groups for the County and for these other Board governed entities. Under the Plan, the County must pay the retiree the difference between the amount CCCERA can pay and the amount that the employee would have received from CCCERA, but for the section 415 (b) limit. The replacement benefits paid by the County cannot exceed this amount. (Gov. Code, § 31899.4 (a).) The County receives a credit from CCCERA for payments made under the Plan.
Effective January 1, 2013, the California Public Employees Pension Reform Act (“PEPRA”), (Statutes of 2012, Ch. 296, 297), places new restrictions on Replacement Benefit Plans. PEPRA prohibits employers from offering a Replacement Benefits Plan to new employees, as defined. In addition, after 2012, employers may not expand an existing Replacement Benefits Plan to cover an additional employee group not previously covered under the plan. (Gov. Code, § 7522.30.)
With the passage of PEPRA, it is necessary to amend the Replacement Benefits Plan to ensure that its terms are consistent with the new law. The amendments would specify that the Plan does not apply to new employees as defined by PEPRA and would revise the definition of plan member accordingly. The amendments would not extend the Plan to any employee group that is not already covered by the existing Plan. Finally, the amendments would clarify that Article 9.2, “No Vested Rights” applies to all employees and retirees covered by the Plan. Upon adoption of the amended and restated Contra Costa County Replacement Benefits Plan, the County will comply with the requirements of Government Code sections 31899 et. seq. and with PEPRA.
The terms of the Contra Costa County Replacement Benefits Plan may not be consistent with PEPRA.