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Politics & Government

Pension Spiking, Banned By CalPERS Continues in LA County

Los Angeles County employees do not participate in the California Public Employees' Retirement System and have retained the ability to increase pensions by cashing out unused benefits at retirement.

While the California Public Employees' Retirement System does not allow "pension spiking" -- cashing out unused benefits to increase final pay, thus pensions -- Los Angeles, Orange and San Diego counties are among 20 who do not participate and allow workers to legally inflate their pension pay beyond what their actual salaries were, it was reported today.

CalPERS, the state's biggest public employee pension system, banned the practice in 1993 to help rein in rapidly increasing costs, but 20 of the state's 58 counties are not part of CalPERS.

Last year, Orange County fought its way to state Supreme Court in an effort to curb benefits sweetened by salary spiking and other incentives, only to learn that is nearly impossible to take back benefits already bestowed upon government employees.

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Gov. Jerry Brown has proposed basing pensions on a three-year average of final pay to discourage what he called "games and gimmicks ... that artificially increase compensation."

It is unclear how big of a drain on public retirement systems the practice is, largely because counties have resisted making public pension data, citing the difficulty and cost of assembling the information, The Times reported.

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Limited data provided by the Los Angeles County Employees Retirement Association showed that at least 4,000 retirees are receiving pensions that exceed their final base pay. But the data lack details to determine if those salaries were "spiked," or if the differential is result of cost-of-living increases or if the phenomenon is a combination of the two.

A sampling of pension data by The Times in Ventura County, which operates outside the CalPERS system, showed that more than 84 percent of government employee making more than $100,000 per year in retirement have higher incomes than they did when they were working. Investment losses and spiraling costs have helped contribute to the county retirement fund being underfunded to the tune of $761 million.

In Kern County, about 77 percent of county employees with pensions of more than $100,000 have seen their retirement pay exceed their annual salaries.

Nearing retirement, Marty Robinson, Ventura County's former chief executive cashed out nearly $34,000 in unused vacation pay, an $11,000 bonus for getting a graduate degree and more than $24,000 in extra pension benefits the county owed her. When she retired at age 62, her pension was calculated at $272,000 annual, though her annual base salary was $228,000 a year, The Times reported.

The Times asked for pension data from the 18 other counties that allow spiking, but most have resisted or said it would be too costly and laborious. Sacramento County officials wanted $63,000 to cover the cost of putting the data together, the newspaper reported.

Ventura County, which has about 5,500 retirees, made public pension data on 148 government retirees whose annual pension pay exceeded $100,000 a year.

Several other counties, including Los Angeles, Orange, San Bernardino and Santa Barbara, have agreed to provide the data, pending the resolution of negotiations over the costs.

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