CalPERS May Contest San Jose's Way With Pension

As noted in prior posts, it seems clear that accumulated public pension rights of retirees and current workers cannot be voided or reduced. And it is also clear that new hires can be given lesser benefits than current workers or retirees. In the private sector, benefit formulas of current worker going forward can be made less generous. However, the degree to which that is possible in the public sector has been disputed. CalPERS takes the position that only new hires can have reduced benefits and formulas. But San Jose has a measure on the ballot that would change formulas for current workers (and new hires) going forward. It appears that CalPERS may oppose the measure in court even though San Jose is not part of CalPERS.

A legal test of the San Jose measure could indirectly affect UC should some group put an initiative on the state ballot that would override the Regents’ December 2010 changes in the UC pension system.

Will ballot measures test vested pension rights? (excerpts)

By Ed Mendel, calpensions.com, 7/25/11

…San Jose is one of a half dozen large cities in California that have their own retirement systems. But it seems likely that CalPERS would support a legal challenge to a precedent-setting change in vested rights. San Jose Mayor Chuck Reed’s proposal, based on California court rulings, would use the declaration of a fiscal emergency to modify vested rights. (The CalPERS general counsel) said he is unaware of the emergency case law actually being used to modify public pensions. “That being said, I think this is going to be the battleground to watch…”

The office of state Attorney General Kamala Harris, asked by four legislators to review the San Jose emergency proposal, said in a preliminary response last month that the “unilateral impairment” of any contract “causes us deep concern.” … A spokeswoman for Mayor Reed said the city plans to meet with the attorney general’s office to explain its proposal…

Full article at http://calpensions.com/2011/07/25/will-ballot-measures-test-vested-pension-rights/

It does seem as if CalPERS is saying no way to San Jose: