A California lawmaker has introduced a bill into the state legislature that would require all public pensions to be calculated using the IRS cap for employees who join the retirement system after 2012. According to The San Francisco Chronicle, the San Mateo Democratic lawmaker, Assemblyman Jerry Hill, introduced the bill after controversy erupted surrounding a request by 36 UC executives for increases in their pensions. The UC executives threatened to sue the public university if UC did not re-calculate their pensions without the IRS cap.
The IRS requires UC to calculate pensions based on a $245,000 cap. So, the pensions for salaries above $245,000 are calculated as if they were $245,000. UC was granted an exception by the IRS in 2007 to lift the cap, but they have not done so. Last week, the UC executives threatened to sue UC if it did not raise their pensions. They say the board of regents voted in 1999 to raise pensions if the IRS lifted the cap. UC argues that it is not obligated to raise the cap and cannot do so in economically uncertain times.
UC leaders said they have to review the bill further before they could comment on it, but that it seemed to represent their viewpoint. The executives have not said much in response to the public and political outcry over their request, but say they will "stand firm."
Assembly bill caps public worker pensions (SFGate.com)