Controller Finds Pension Spiking Vulnerabilities at CalPERSCategories: California Developments
California State Controller’s Office Press Release, September 9, 2014
The State Controller’s Office’s (SCO) recent review of the California Public Employee Retirement System (CalPERS) found oversight of reported payroll from employers to be lacking pension spiking controls, but could not identify any specific cases in its 11 agency sample. The SCO analyzed CalPERS’ electronic data processing systems to determine CalPERS’ ability to prevent and detect pension spiking in employer agencies, which total over 3,100 special districts, cities and counties statewide.
The practice of pension spiking, based on unusually large final employee compensation achieved through one-time bonuses or payouts, results in greater-than-earned retirement benefits. Pension spiking was a target in both Governor Brown’s and the Legislature’s pension reform efforts in 2012. Last month, pension spiking came under fire when CalPERS adopted regulations for pensionable compensation calculations. The governor criticized the CalPERS board for allowing 99 types of special pay and temporary pay upgrades for interim assignments to count toward the final benefits calculations. CalPERS staff pledged their commitment to enhanced monitoring of reported payroll to ensure only eligible payments are included in the final compensation calculation.
The SCO full report and CalPERS response is available here.