CalPERS-backed bill would end complex 'AER' option and require service-credit balances paid within 90 days

The California State Assembly Committee on Public Employment and Retirement advanced Senate Bill 939 on a unanimous vote, after the sponsor described the measure as a fix to a complex CalPERS purchase option that has produced unintended consequences for members and employers.

The sponsor (speaker 4) told the committee SB 939 is sponsored by the California Public Employees' Retirement System and “simplifies the options to purchase service credit at the time of retirement or post retirement.” The sponsor described the actuarial equivalent reduction (AER) option, introduced in 2020, as creating permanent reductions in service credit and administrative burdens for CalPERS and employers. Under SB 939, unpaid balances at retirement would need to be paid in full within 90 days; the sponsor said AER calculations would cease on or after Jan. 1, 2028.

Why it matters: The sponsor said the change is intended to encourage members to purchase service credit earlier in life and to ensure purchases are fully funded at retirement, reducing long-term cost pressures on CalPERS and employers. The sponsor said the bill had no registered opposition before the committee.

Details and supporters: The sponsor described operational and cost pressures created by the AER option and said members and families have sometimes paid more than owed; the sponsor also noted increased administrative workload. A CalPERS technical representative (introduced by the sponsor) was present for questions. No opposition witnesses appeared during the hearing.

Action: Assemblymember Lackey moved the bill and Assemblymember Nguyen seconded. The clerk recorded a unanimous vote of members present, and the committee referred SB 939 to the Committee on Appropriations.

Next steps: SB 939 was sent to Appropriations; the committee did not record any registered opposition during the hearing.