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SB 939

Public employees' retirement: service credit: payments.

2025-2026 Regular Session Introduced by John Laird

Sets a 90-day deadline for paying new service credit balances after retirement and reduces benefits if unpaid, standardizing actuarial adjustments.

In Assembly. Read first time. Held at Desk.
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Bill Summary · SB 939

Summary of SB 939 (2025-2026) — Public employees’ retirement: service credit: payments

Author: Senator Laird (co-sponsor: John Laird)

Jurisdiction: California

Subject: Public Employees’ Retirement Law (PERL) — treatment of service credit elections and associated payments

Status: Amended and heard in 2025–2026 process; most recent action places the bill on consent calendar. Effective dates tied to January 1, 2028 for several provisions.

Purpose and intent
- The bill clarifies and updates how unpaid balances for service credit elections are handled under PERL, with a focus on timing of payments, the treatment of balances after retirement or preretirement death, and the actuarial impact on the member’s or survivor’s/beneficiary’s allowance.
- It introduces a uniform 90-day payment deadline for elections with an initial effective date on or after January 1, 2028 (with limited exceptions) and requires remaining unpaid balances to be adjusted against the credited service if not fully paid.
- It also narrows or preserves certain options for elective changes to how service credit is financed (lump-sum vs installments vs reductions to benefits), while aligning timelines across different types of benefits (normal contributions, arrears, absences, public service credit).

Key provisions and changes
1. General approach to unpaid balances
- Unpaid balances associated with service credit elections that take effect on or after Jan 1, 2020 are usually due and payable at retirement or preretirement death, with the member’s, survivor’s, or beneficiary’s allowance reduced by the actuarial equivalent of the unpaid balance.
- For elections with effective dates on or after Jan 1, 2028, payment deadlines are tightened: the member must pay within 90 days after retirement, and the survivor/beneficiary must pay within 90 days after the balance-due notice is mailed. If unpaid, the service credit is reduced proportionally, and related credits/dependencies may be eliminated as specified.

  1. Transition from installment options

    • For elections to purchase service credit via installments, there are provisions to cancel installments prospectively under certain conditions (disability retirement, etc.), with specific timelines (e.g., within 30 days for disability-related elections) and recalculation of balances including interest.
    • Affected balances not paid may be handled under the 20776 framework, with reductions in credited service or other effects on the retirement allowance.

  2. Tier elections and deposits

    • The bill narrows or makes applicable only to elections made before certain dates (e.g., the alternative deposit approach for First Tier elections), and modifies how deposits or reductions to allowances can satisfy past-due balances.
    • It specifies when deposits, including actuarial adjustments, must be made and how those deposits interact with remaining unpaid balances.

  3. Administrative and regulatory framework

    • The bill preserves board rulemaking authority to implement these changes, with regulations exempt from certain review processes but subject to filing and publication in the California Code of Regulations.

Who is affected
- Current and former PERS members who have elected or may elect to receive service credit for various types of public service.
- Survivors or beneficiaries who may receive reduced allowances due to unpaid balances.
- Employers and plan administrators who manage the timing and processing of service credits, payments, and benefit computations.

Timeline and implementation
- Core revisions target elections with an effective date on or after January 1, 2028, establishing a 90-day payment window.
- Earlier elections (prior to 2028) continue to operate under existing provisions, with adjustments as delineated in the bill.

Overall impact
- The bill aims to tighten payment timelines, standardize the treatment of unpaid balances, and ensure actuarial adjustments are consistently applied when service credit payments are not fully completed.
- It balances flexibility for members (installment and lump-sum options) with safeguards to protect the integrity of retirement benefits and the financial administration of PERS.

Compiled from official sources — confirm details with the bill’s official record.

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