The practice of pension spiking, or artificially inflating a final year salary before retiring, is often paraded by advocates of pension reform as the greatest evil of a broken retirement system.

While the practice is technically prohibited in CalPERS programs, organized labor and independent reformers are making headway at preventing the abuse in counties that operate independent systems. AB340 would make all non-standard pay – including vacation, sick time, annual leave – extraneous to the pension formula.

The bill goes further than simply addressing pension spiking. It also would take steps to limit the ability of retired workers from being hired back as consultants. In certain cases, retired officials claim their pensions and a generous part-time contract, or doing what some local government reformers would call double dipping. That part of the bill has less universal support. In the opinion of CSAC, that would limit the right of counties to manage their affairs.

From the Ventura County Star:

When a county chief administrator receives a generous final-year bonus, or a fire chief negotiates severance pay on his or her way out the door, it can be a pay boost that keeps on giving.

In some counties, such pay boosts count as compensation that is used to calculate an individual’s pension, resulting in yearly retirement benefits that are thousands of dollars higher than what they otherwise would have been.

Such practices would be a thing of the past under legislation approved Wednesday by the Assembly Public Employees, Retirement and Social Security Committee – legislation that Chairman Warren Furutani, D-Long Beach, described as a measure to eliminate “certain practices that just don’t pass the smell test.”

Read the full article here.