Court further expands rationale for modifying pension benefits

Last year, in a seminal vested rights decision, the California Supreme Court expanded the permissible bases for modifying public employee pensions in two significant ways (Alameda County Deputy Sheriff's Assn v. ACERA). The court held that the California Legislature had the constitutional authority to change the definition of "compensation earnable" (which dictates the amount of a pension) to prevent abuses such as "pension spiking."

And, more important, the court held for the first time that a pension change resulting in a financial disadvantage to public employees need not include a "comparable advantage"—if providing the new advantage "would undermine, or would otherwise be inconsistent with the modification's constitutionally permissible purpose."

Earlier this month, in another pension case, Wilmot v. CCCERA, the First District Court of Appeal applied the Alameda decision to uphold a law that requires a limited forfeiture of a public employee's pension if the employee committed a felony related to the employee's public service. In doing so, the court of appeal further expanded the permissible rationales for modifying vested pension rights and provided another example of a pension change that need not provide a comparable new advantage.

Retirement Board eliminates benefits

Both Alameda and Wilmot involved the application of the California Public Employees' Pension Reform Act of 2013 (PEPRA), which went into effect January 1, 2013.