2010 California Code
Government Code
Article 3. Cost-of-living Adjustments

21310.  It is the purpose of the Legislature in enacting this
article to provide for the preservation of the purchasing power of
benefits under the Public Employees' Retirement Law through a system
of adjustments in benefits based on changes in living costs.




21310.5.  The cost-of-living adjustments under Section 415(d) of the
Internal Revenue Code to the limits described in Section 415(b) of
the Internal Revenue Code, as prescribed by the regulations of the
Department of the Treasury of the United States, are hereby
incorporated by reference and shall continue to apply after a member'
s severance from employment or annuity starting date. The amount
payable to a member in any limitation year, including any
cost-of-living adjustments provided under this article, shall not be
greater than the limit applicable under Section 415(b) of the
Internal Revenue Code at the annuity starting date, as increased in
subsequent years pursuant to Section 415(d) of the Internal Revenue
Code and the associated regulations.



21311.  The following definitions shall govern the application of
this article:
   (a) "Monthly allowance" means any allowance payable monthly to a
retired person, a survivor or beneficiary of a member or a retired
person, other than a monthly installment of a basic death benefit,
the commuted value of an unpaid temporary annuity, or an optional
settlement 1, or allowances payable under Article 3 (commencing with
Section 21570) of Chapter 14. There shall be excluded from the
monthly allowance, for purposes of any adjustment under this article,
any portion of the allowance derived from accumulated additional
contributions of a member.
   (b) "Base allowance" means the amount of monthly allowance that
would be payable to the recipient at the time of an annual adjustment
under this article had this article not been enacted.
   (c) Effective January 1, 1978, "Consumer Price Index" means the
United States city average "Consumer Price Index for All Urban
Consumers." The "Consumer Price Index" for any period prior to
January 1, 1978, means the United States city average consumer price
index. Should the reference base of the consumer price indices
(presently 1957-59=100) be changed, each of the indices used to
determine the consumer price index as defined in this section will be
the indices converted to the new base by standard statistical
methods.
   (d) "Base year" means:
   (1) The calendar year 1965 for all members whose retirement
occurred prior to January 1, 1966, and for the beneficiaries and
survivors of those retired members.
   (2) The calendar year of retirement for all members whose
retirement occurs after December 31, 1965, and for the beneficiaries
and survivors of those members.
   (3) The calendar year 1965 for survivors of members whose death
occurred before January 1, 1966.
   (4) The calendar year in which a member's death occurs for
survivors of members whose death occurred before retirement and on or
after January 1, 1966.



21312.  Notwithstanding Section 20481, monthly allowances payable to
persons retired under a local system of a contracting agency at the
time of contract shall be adjusted in accordance with this article.
However, with respect to those retired persons under a contract
effective on or after April 1, 1973, the "base year" shall be the
year in which the contract is effective. Allowances payable for
service to a public agency whose contract is terminated on or after
December 1, 1969, shall be adjusted in accordance with this article
subject to reduction in accordance with Section 20577. Allowances
payable for service to a public agency whose contract was terminated
prior to December 1, 1969, shall not be adjusted in accordance with
this article.



21313.  Monthly allowances shall be adjusted annually for time
commencing on April 1 and effective with the monthly allowance
regularly payable on the first day of May beginning with May 1, 1969.
The adjusted monthly allowance shall be equal to the base allowance
multiplied by an adjustment factor which is equal to the ratio
obtained by dividing the consumer price index for the immediately
preceding year by the consumer price index for the recipient's base
year. The adjustments shall be subject to the conditions and limits
provided in this article.


21317.  (a) In addition to the increase of allowance authorized by
and granted pursuant to Section 21313 and notwithstanding the
limitation in subdivision (b) of Section 21329, any monthly allowance
computed under or limited by any section other than Section 21362,
as amended by Chapter 96 of the Statutes of 1971, and paid with
respect to a local safety member whose retirement for service or
nonindustrial death before retirement occurred prior to the date the
contracting agency elected to be subject to Section 21362 as so
amended, shall be increased by 15 percent. The percentage shall be
applied to the allowance payable on the date this section becomes
applicable to the contracting agency and the allowance as so
increased shall be paid for time on and after that date and until the
first day of April immediately following the date of application.
The base allowance shall be increased by the same percentage for
annual adjustments beginning with the adjustment effective for time
commencing with that annual adjustment.
   (b) For the purposes of this section, all contributions,
liabilities, actuarial interest rates, and other valuation factors
shall be determined on the basis of actuarial assumptions and methods
that, in the aggregate, are reasonable and that, in combination,
offer the actuary's best estimate of anticipated experience under the
system.
   (c) The additional employer contributions required under this
section shall be computed as a level percentage of member
compensation. The additional contribution rate required at the time
this section is added to a contract shall not be less than the sum of
(1) the actuarial normal cost and (2) the additional contribution
required to amortize the increase in accrued liability attributable
to benefits elected under this section over a period of not more than
30 years from the date this section becomes effective in the
contracting agency's contract.
   (d) This section shall not apply to any contracting agency nor to
the employees of any contracting agency unless that agency elected to
be subject to the provisions of this section in its contract with
the board on or before December 31, 2001.



21318.  (a) In addition to the increase of allowance authorized by
and granted pursuant to Section 21313 and notwithstanding the
limitation in subdivision (b) of Section 21329, any monthly allowance
computed under or limited by any section other than Section 21362,
as amended by Chapter 96 of the Statutes of 1971, and paid with
respect to a local safety member whose retirement for service or
nonindustrial death before retirement occurred, or who was granted an
industrial or nonindustrial disability retirement, prior to the date
the contracting agency elected to be subject to Section 21362 as so
amended, shall be increased by 15 percent. The percentage shall be
applied to the allowance payable on the date this section becomes
applicable to the contracting agency and the allowance as so
increased shall be paid for time on and after that date and until the
first day of April immediately following the date of application.
The base allowance shall be increased by the same percentage for
annual adjustments beginning with the adjustment effective for time
commencing with that annual adjustment.
   (b) For the purposes of this section, all contributions,
liabilities, actuarial interest rates, and other valuation factors
shall be determined on the basis of actuarial assumptions and methods
that, in the aggregate, are reasonable and that, in combination,
offer the actuary's best estimate of anticipated experience under
this system.
   (c) The additional employer contributions required under this
section shall be computed as a level percentage of member
compensation. The additional contribution rate required at the time
this section is added to a contract shall not be less than the sum of
(1) the actuarial normal cost and (2) the additional contribution
required to amortize the increase in accrued liability attributable
to benefits elected under this section over a period of not more than
30 years from the date this section becomes effective in the
contracting agency's contract.
   (d) This section shall not apply to any contracting agency nor to
the employees of any contracting agency unless that agency elected to
be subject to the provisions of this section in its contract with
the board on or before December 31, 2001.



21319.  (a) In addition to the increase of allowance authorized by
and granted pursuant to Section 21313 and notwithstanding the
limitation in subdivision (b) of Section 21329, any monthly allowance
computed under or limited by a retirement formula applicable to
local miscellaneous members who retired prior to July 1, 1971, or to
local miscellaneous members who so retired and then were reinstated
from retirement and retired again after July 1, 1971, and whose
allowance is based upon such a formula and paid with respect to a
local miscellaneous member whose retirement or whose initial
retirement or death before retirement occurred prior to July 1, 1971,
shall be increased by 15 percent. The percentage shall be applied to
the allowance payable on the date this section becomes applicable to
the contracting agency and the allowance as so increased shall be
paid for time on and after that date and until the first day of April
immediately following the date of the application. The base
allowance shall be increased by the same percentage for annual
adjustments beginning with the adjustment effective for time
commencing with that annual adjustment.
   (b) This section shall apply only to the portion of the allowance
that is based on service in employment with the employer electing to
be subject to this section.
   (c) This section shall not apply to any contracting agency nor to
the employees of any contracting agency unless that agency elected to
be subject to the provisions of this section in its contract with
the board on or before December 31, 2001.



21320.  (a) In addition to the increase in allowance authorized by
and granted pursuant to Section 21313, and notwithstanding the
limitation on such increases imposed by this article, the monthly
allowance paid with respect to a state member, other than a school
member, who retired or died prior to January 1, 1981, shall be
increased by 4 percent.
   (b) The 4 percent shall be applied to the allowance payable on
July 1, 1981, less the amount of the allowance paid pursuant to
Section 21231, and the allowance as so increased shall be paid for
time on and after that date and until April 1, 1982. The base
allowance shall be the allowance as so increased, less payments
pursuant to Section 21231, for annual adjustments effective for time
commencing on April 1, 1982.



21322.  Section 21320 shall apply to any contracting agency that has
included the provisions of that section in its contract with the
board on or before December 31, 2001.



21325.  (a) In addition to the increase in allowance authorized by
and granted pursuant to the provisions of Section 21313, and
notwithstanding the limitation on those increases imposed by this
article, the monthly allowance paid with respect to a local member,
other than a school member, who retired or died prior to January 1,
1974, shall be increased by the percentage set forth opposite the
period in the following table during which retirement became
effective or death occurred:

  Period during which retirement
  or death occurred:                 Percentage:
  On or before December 31,              15%
  1965..........................
  12 months ending December 31,          14%
  1966..........................
  12 months ending December 31,          13%
  1967..........................
  12 months ending December 31,          12%
  1968..........................
  12 months ending December 31,          9%
  1969..........................
  12 months ending December 31,          6%
  1970..........................
  12 months ending December 31,          5%
  1971..........................
  12 months ending December 31,          4%
  1972..........................
  12 months ending December 31,          3%
  1973..........................

   (b) The percentage shall be applied to the allowance payable on
the date this section becomes applicable to the contracting agency,
and the allowance as so increased shall be paid for time on and after
that date and until the first day of April immediately following the
date of application. The base allowance shall be the allowance as
increased under this section. The base year for annual adjustments of
allowances increased by this section shall be the calendar year
preceding the year of increase if the increase date is after April
1st of any calendar year, and the second calendar year preceding the
year of increase if the increase date is on or before April 1st of
any calendar year.
   (c) This section shall not apply to any contracting agency unless
that agency elected to be subject to the provisions of this section
in its contract with the board on or before December 31, 2001.



21326.  (a) In addition to the increase in allowance authorized by
and granted pursuant to the provisions of Section 21313, and
notwithstanding the limitation on those increases imposed by this
article, the monthly allowance paid with respect to a local member,
other than a school member, who retired or died prior to July 1,
1974, shall be increased by the percentage set forth opposite the
period in the following table during which retirement became
effective or death occurred:

  Period during which retirement
  or death occurred:                 Percentage:
  On or before December 31,              7%
  1965..........................
  12 months ending December 31,          6%
  1966..........................
  12 months ending December 31,          5%
  1967..........................
  12 months ending December 31,          4%
  1968..........................
  12 months ending December 31,          3%
  1969..........................
  18 months ending June 30,              2%
  1971..........................
  36 months ending June 30,              1%
  1974..........................

   (b) The percentage shall be applied to the allowance payable on
the date this section becomes applicable to the contracting agency,
and the allowance as so increased shall be paid for time on and after
that date and until the first day of April immediately following the
date of application. The base allowance shall be the allowance as
increased under this section. The base year for annual adjustments of
allowances increased by this section shall be the calendar year
preceding the year of increase if the increase date is after April
1st of any calendar year, and the second calendar year preceding the
year of increase if the increase date is on or before April 1st of
any calendar year.
   (c) This section shall not apply to any contracting agency unless
the agency elected to be subject to the provisions of this section in
its contract with the board on or before December 31, 2001.



21327.  In addition to the increase in allowance authorized and
granted pursuant to provisions of Section 21313, and notwithstanding
the limitation on those increases imposed by this article, effective
January 1, 1980, or the date this section becomes applicable to the
contracting agency, the monthly allowance paid with respect to a
state or local member, other than a school member, who retired or
died prior to January 1, 1975, shall be increased by the percentage
set forth opposite the year of retirement or death in the following
schedule:

  Period during which retirement
  or death occurred                   Percentage
  12 months ending December 31,          1.51
  1967............................
  12 months ending December 31,          1.26
  1968............................
  12 months ending December 31,          1.86
  1969............................
  12 months ending December 31,          2.55
  1970............................
  6 months ending June 30, 1971...       1.91
  6 months ending December 31,           7.05
  1971............................
  12 months ending December 31,          6.76
  1972............................
  12 months ending December 31,          4.45
  1973............................
  6 months ending June 30, 1974...       0.47
  6 months ending December 31,           1.31
  1974............................

   The percentage shall be applied to the allowance payable on
January 1, 1980, or the date this section becomes applicable to the
contracting agency, and the allowance as so increased shall be paid
for time on and after the date and until the first day of April
immediately following the date of application. The base allowance
shall be the allowance as increased under this section. The base year
for annual adjustments of allowances increased by this section shall
be the calendar year preceding the year of increase if the increase
date is after April 1st of any calendar year, and the second calendar
year preceding the year of increase if the increase date is on or
before April 1st of any calendar year.
   This section shall not apply to any contracting agency unless the
agency elected to be subject to the provisions of this section in its
contract with the board on or before December 31, 2001.



21328.  (a) In addition to the increase in allowance authorized and
granted pursuant to Section 21313, and notwithstanding the limitation
on that increase imposed by this article and subdivision (b) of
Section 21337 or subdivision (a) of Section 21337.1, effective
January 1, 2000, or the date this section becomes applicable to the
contracting agency, the monthly allowance paid with respect to a
state, local, or school member who retired or died prior to January
1, 2000, or the date this section becomes applicable to the
contracting agency, other than an allowance provided by Article 3
(commencing with Section 21570) of Chapter 14, shall be increased by
the percentage set forth opposite the year of retirement or death in
the following schedule:

  Period during which
  retirement
  or death occurred:               Percentage:
  24 months ending Dec. 31,            0.0%
  1999
  12 months ending Dec. 31,            1.0%
  1997
  24 months ending Dec. 31,            2.0%
  1996
  60 months ending Dec. 31,            3.0%
  1994
  60 months ending Dec. 31,            4.0%
  1989
  120 months ending Dec.               5.0%
  31, 1984
  12 months ending Dec. 31,
  1974                                 6.0%
  or earlier

   The percentage shall be applied to the allowance payable on
January 1, 2000, or the date this section becomes applicable to the
contracting agency, and the allowance as so increased shall be paid
for time on and after that date and until the first day of April
immediately following the date of application. The base allowance
shall be the allowance as increased under this section.
Notwithstanding Section 21337 or 21337.1 to the contrary, this
increase shall not be included in determining the initial monthly
allowance upon which a supplemental benefit is payable pursuant to
Section 21337 or 21337.1.
   (b) This section shall not apply to any contracting agency unless
and until the agency elects to be subject to its provisions by
amendment to its contract, made in the manner prescribed for approval
of contracts, or, in the case of contracts made after the effective
date of this section, by an express provision in the contract making
the contracting agency subject to the provisions of this section.




21329.  The adjustments provided by this article are subject to the
following limitations:
   (a) No adjustment shall be made for any year for which the
adjustment is less than 1 percent of the base allowance, and the
adjustment for any year shall not exceed 6 percent of the base
allowance.
   (b) No monthly allowance in any year may exceed an amount equal to
the base allowance increased by 2 percent per year compounded for
the number of years intervening between the end of the base year and
the beginning of the calendar year in which the adjustment is made.
   (c) No monthly allowance in any year shall be less than the base
allowance.
   (d) No adjustment shall be made in any year in which the actuarial
interest rate is less than 4.5 percent.



21330.  Notwithstanding anything to the contrary in this article,
the monthly allowance for service credited under the Second Tier
shall be adjusted annually beginning with the second calendar year
following retirement for time commencing on April 1 and payable on
the first day of May. The adjusted monthly allowance shall be equal
to the base allowance increased by 3 percent per year compounded for
the number of years intervening between the end of the base year and
the beginning of the calendar year in which the adjustment is made.



21331.  An adjustment in a monthly allowance under this article
shall be derived from or credited to contributions of the employer,
and if the monthly allowance is a retirement allowance the adjustment
shall be applied as an increase or decrease, as the case may be, in
the current and prior service pensions.



21335.  Notwithstanding Section 21329, the adjustments in allowances
for local members provided by this article for the time commencing
on and after the annual adjustment date following the date specified
by the contracting agency in its contract shall be subject to the
following limitations:
   (a) No adjustment shall be made for any year for which the
adjustment is less than 1 percent of the base allowance.
   (b) No monthly allowance in any year may exceed an amount equal to
the base allowance increased by 3, 4, or 5 percent per year
compounded for the number of years intervening between the end of the
base year and the beginning of the calendar year in which the
adjustment is made. A contracting agency shall designate the
applicable percentage and may amend its contract to increase the
percentage.
   (c) No monthly allowance in any year shall be less than the base
allowance.
   (d) No adjustment shall be made in any year in which the actuarial
interest rate is less than 5.25 percent.
   However, the adjusted allowances in years following the year in
which the contract of an agency subject to this section is terminated
may not exceed the adjusted allowance in the year of contract
termination or the amount determined in accordance with subdivision
(b) of Section 21329, whichever is the greater.
   For the purposes of this section, all contributions, liabilities,
actuarial interest rates, and other valuation factors shall be
determined on the basis of actuarial assumptions and methods that, in
the aggregate, are reasonable and that, in combination, offer the
actuary's best estimate of anticipated experience under this system.
   The additional employer contributions required as a result of
making this section applicable shall be computed as a level
percentage of member compensation. The additional contribution rate
required, at the time this section is added to a contract, shall not
be less than the sum of (1) the actuarial normal cost and (2) the
additional contribution required to amortize the increase in accrued
liability attributable to benefits elected under this section over a
period of not more than 30 years from the date this section becomes
effective in the public agency's contract.
   This section shall not apply to any contracting agency, unless and
until the agency elects to be subject to this section by amendment
to its contract made in the manner prescribed for approval of
contracts or, in the case of contracts made after January 1, 1975, by
express provision in the contract making the contracting agency
subject to this section.



21337.  (a) On an annual basis, the board shall transfer funds to
separate supplemental state and school accounts, to fund the
purchasing power protection allowance of retirees, survivors, and
beneficiaries of state or school employers, respectively. The amounts
transferred shall be the lesser of the following:
   (1) The amount necessary to increase all monthly allowances paid
by this system to retirees, survivors, and beneficiaries of state or
school employers to 75 percent of the purchasing power of the initial
monthly allowances.
   (2) One and one-tenth percent of the net earnings on state or
school member contributions, as determined by Section 20178.
   (b) The funds transferred to the two separate supplemental
accounts shall be utilized to increase all monthly allowances paid by
this system to retirees, survivors, and beneficiaries of state and
school employers, up to a maximum of 75 percent of the purchasing
power, as determined by the board, of the initial monthly allowances,
notwithstanding the benefit provided by Section 21328, that were
received by every retired state or school member or survivor or
beneficiary of a state or school member or retiree who was eligible
to receive any allowance at the end of each fiscal year. Funds
remaining in the state or school account after the payment of
benefits under this section shall be transferred to the respective
state or school employer accounts.
   (c) Annual adjustments in the purchasing power protection
allowance shall be effective with the monthly allowance regularly
payable on the first day of May, provided that in the first year
after enactment of the act adding this subdivision, the purchasing
power protection allowance adjustment to the monthly allowance
payable on the first day of May shall also reflect an adjustment for
the period from January 1 through April 30. The board shall implement
the provisions of this subdivision on or before January 1, 2012,
unless the board determines that the implementation tasks cannot be
completed until a later date, in which case, the board shall be
prepared to implement the provisions of this section no later than
July 1, 2013.



21337.1.  (a) All monthly allowances paid by the system to retirees
of contracting public agencies, and to survivors and beneficiaries of
members and retirees of those agencies, shall annually be increased
to 80 percent of the purchasing power of the initial monthly
allowance as determined by the board. Adjustments in the purchasing
power protection allowance shall be effective with the monthly
allowance regularly payable on the first day of May, provided that,
in the first year after enactment of the act amending this
subdivision, the purchasing power protection allowance adjustment to
the monthly allowance payable on the first day of May shall also
reflect an adjustment for the period from January 1 through April 30.
   (b) Notwithstanding subdivision (a), retirees of contracting
public agencies, and survivors and beneficiaries of members and
retirees of those agencies, who receive a monthly allowance payable
by this system shall also receive, on or after January 1, 2001, a
one-time lump-sum payment in an amount equal to the difference, if
any, between the purchasing power protection allowance paid between
January 1, 2000, and December 31, 2000, and the purchasing power
protection allowance that would have been payable if this section had
been operative during that period.
   (c) The cost of the increase in allowances paid pursuant to
subdivisions (a) and (b) shall be paid from the same assets of the
employer used in the determination of each employer contribution rate
for each membership classification under which service was credited
that affects the allowance calculation of the retirees, survivors, or
beneficiaries.