2006 VENTURA UPDATE
LACERA and its actuary have completed Ventura Settlement calculations, and monthly allowances for eligible retirees, survivors, and beneficiaries have been adjusted as of December 31, 2005 or January 31, 2006. Retroactive benefit payments will be mailed on February 28, 2006. If you are eligible, you have already received one or more letters with details about your adjustment. (Note for retirees whose LACERA allowance is based on final compensation from a reciprocal system: LACERA must first contact your reciprocal system; any adjustments will be made at a later date.) If you have questions, call LACERA at 800-786-6464, and our Retirement Benefits Specialists will help you. (2-1-06)
The original “Ventura” decision by the California Supreme Court reversed the rule that excluded from the calculation of pensionable income pay items that were not received by everyone in the same pay class (“special pay items”). As a result, LACERA began including special pay items in pensionable income, starting October 1997 when the Supreme Court’s ruling became final.
A second round of litigation was instituted to determine whether the Supreme Court’s Ventura decision should be applied retroactively to persons already retired. The trial court held that retroactive application was required, and that ruling was upheld by the Court of Appeal. Recently, the parties concluded negotiation of a settlement that sets forth the procedures for implementing the Ventura decision retroactively for LACERA members who retired with a final compensation period that included any time prior to October 1997.
The negotiated settlement was presented to the court for approval. All objections to the proposed settlement were overruled and the settlement was approved on May 31, 2005. Anyone who filed an objection has until August 1, 2005, to appeal the court’s approval. As an organization, LACERA has already begun the administrative work necessary in order to make payments as soon as possible.
Click here for a complete listing of the special pay items that must now be included when calculating a retiree’s monthly retirement allowance.
The following describes the implementation plan for the settlement, correct as of August 14, 2006.
How Will the Ventura Settlement Affect Me?
The Ventura Settlement takes into account the fact that there are limited historical payroll records available for making retirement benefit recalculations. So, if your retirement date is prior to January 1, 1993, and you did not submit a claim to have your Ventura Settlement adjustment researched, then your Ventura Settlement will be a set percentage provided to all members who retired during the year you retired. Again, this is for members who retired before January 1, 1993.
If you retired on or after January 1, 1993, and your final compensation period used for your retirement benefit includes any month between January 1, 1993, and October 1, 1997, your retirement benefit will be individually recalculated using your payroll records. LACERA is able to perform these recalculations because most of the payroll records are available in the computer system.
If you submitted a claim for individual recalculation, LACERA will be recalculating your claim based on the available payroll records and the Ventura Settlement adjustment rules.
If you are eligible for a Ventura Settlement adjustment, your retirement will be adjusted for future payments and all your previous benefit payments received on or after May 26, 1995. Your Ventura Settlement adjustment will include a reduction for employee contributions and attorneys’ fees awarded by the court.
If you retired after October 1, 1997, and any of your one-year or three-year final compensation period(s) (depending on the plan) falls before October 1, 1997, your pension benefit will be recalculated to include special pay items earned prior to that date.
When Will I Receive My Ventura Settlement Adjustment?
Although the Ventura Settlement was signed as anticipated, LACERA must now calculate retirement allowances and the retroactive adjustments that eligible retirees and survivors will receive. We anticipate this process will take, by conservative estimate, a number of months. We are purposely not publishing our expected time frame for making the Ventura Settlement adjustments at this time. There are thousands of accounts to be researched and tens of thousands of Ventura Settlement adjustments that need to be performed and checked. Your LACERA staff will work to complete this task as quickly and accurately as possible. However, LACERA does not want to lose your trust with an overly optimistic completion date.
There are several reasons the process will take months.
First, LACERA does not have electronic pay records for all retirees.Therefore, staff may have to research individual microfiche files for approximately 3,600 retirees to determine if they had special pay items during their one-year or three-year final compensation period, and to calculate their retirement allowance adjustment, if any. This means we must review at least 43,200 months of information, and possibly up to 129,600 months—by hand.
- This includes all pre-1993 retirees who submitted a claim for individual calculation; and
- Retirees with final compensation periods that include one or more months between January 1993 and March 1993.
Second, upon completing the research, LACERA will provide the pay information to the actuary who will use it to determine the Ventura Settlement adjustment and back contributions owed on the special pay items.
Third, LACERA must wait until all Ventura Settlement adjustments are recalculated before the attorneys’ fee award can be spread among the members, on a pro-rata basis.
Fourth, the actuary will then create adjustment records to be used by LACERA to pay your Ventura Settlement Adjustments.
How Does the Settlement Affect Active Members?
Since October 1, 1997, the date of the initial Ventura decision, contributions have been required on all special pay items earned by active members. While active members are not eligible for any of the retiree payments mentioned above, the good news is that LACERA will not collect back contributions on special pay items earned prior to October 1997. When you retire, the special pay items earned during your final compensation period (one or three years, depending on your plan) will be included in the calculation of your retirement allowance.
- Information prior to the Ventura Settlement (5-9-05)
- Ventura Settlement Class Notice (12-21-05)
- Pay item treatment under the settlement (5-11-05)