A
just released Court of Appeals decision
has reaffirmed the importance of vested pension rights in a case brought by the Alameda County Deputy Sheriffs Association. The case resulted from a decision of the Retirement Board to remove various pay categories from final compensation. The California Supreme Court
has been awaiting this ruling
before reviewing arguments in a pending case
from Marin County
regarding vested pension rights that rolled back pension protections.
After reviewing decades of Supreme Court cases concerning vested rights, the court agreed with the Marin case that such a change "should" be offset with a new, comparable advantage. "Should," held the court, "does not mean 'don't have to.' It means 'really ought to.' Thus, when no comparative new advantages are given, the corresponding burden to justify any changes with respect to legacy members will be substantive."
However, the court went on to disagree with the Marin case, writing: "[W]e believe that the Marin court improperly relied on its general sense of what a reasonable pension might be, rather than acknowledging that the Supreme Court has expressly defined a reasonable pension as one which is subject only to reasonable modification" (emphasis in the case).
The court elaborated on its criticism of the Marin case, noting that court had "too quickly dismissed what could amount to significant financial disadvantages" for the employees, "impermissibly focusing on the unfunded pension liability crisis in general."
This latest ruling is a strong reminder Supreme Court case law requires an individualized balancing test to determine if it is reasonable to make a change to a vested pension right.
We will keep you updated as the cases proceed before the California Supreme Court.
