CalPERS retirees are subject to a pension clawback for their consultancy work

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A decision by Tarlochan Sandhu to seek part-time work as a local government consultant while collecting his pension from the California Employees’ Retirement System will likely cost him at least $ 52,000.

Sandhu, 66, is one of five retirees who California Public Employees Retirement System claims reimbursement of pensions they received while working part-time for several municipalities. One of them owes $ 238,000.

All five believed they were complying with regulations that restrict when California government retirees can work for an agency that pays CalPERS benefits. The reason: they were placed and paid for by a third-party organization called Regional government services.

Sandhu said RGS employees told him he was “playing by the rules” by working as a consultant through the agency instead of contracting directly with a city.

But CalPERS maintains that retirees worked in paid jobs under the direction of local government leaders. For CalPERS, this means retirees should not have retired while in their consulting role.

In addition to repaying the pension money, Sandhu and the other four retirees will also be forced to re-register as CalPERS beneficiaries, losing cost-of-living increases of up to 10% in a proposed settlement. They will be required to pay CalPERS employee contributions for their work in their post-employment jobs.

The CalPERS board is expected to find that employees broke post-retirement rules at its meeting on Wednesday, forcing them to pay back around $ 400,000. The board can uphold, reject or modify the recommendations of the staff of the pension system and the decision of an administrative judge that the employees violated the rules relating to the employees after retirement.

State administrative judge Coren Wong had said in separate rulings that the municipalities’ contracts with RGS hid the fact that the employees were in fact employed by the municipalities.

Carmel Valley RGS is a joint power authority that provides consulting and administrative services to local governments in California.

CalPERS general counsel Matthew Jacobs said in a statement to the Sacramento Bee that the administrative judge made the right decision.

“CalPERS agrees with the judge’s findings that RGS’s business model is a ‘subterfuge to hide the fact that retirees were working as employees of the cities in question,'” he said.

Jacobs said whether retirees would be required to repay “some of the inappropriate benefits they received” is not an issue in the case.

He said if retirees are required to repay, they should look to RGS for compensation.

RGS Client Services Assistant Sophie Selivanoff said her agency was not “a criminal” as CalPERS described it. She said he was trained to help municipalities, not to break CalPERS post-employment rules.

CalPERS rules generally prohibit retirees from working for an entity participating in the pension system’s benefits program, but acting as a consultant for less than 960 hours per year is considered an exception.

Part-time work in retirement

Sandhu said he believed he would make the extra money, having retired as director of financial accounting for the Santa Clara Valley Transportation Authority in 2011.

“I was bored. I wanted to keep busy,” said Sandhu, who worked part-time for the cities of Capitola, Alameda, Los Altos Hills and Union City, serving as CFO in 2015 and 2016. “ I had no idea CalPERS was going to penalize me. Paying the money will have a big financial impact on my life. ”

The Fremont resident won’t make the biggest payment.

CalPERS offered to appraise Margaret Souza over $ 238,000 for her part-time work, one to two days a week as Acting CFO in the Town of Hughson, Stanislaus County, from November 2012 to July. 2015, according to documents from the pension system.

Souza retired as Chief Financial Officer for the City of Patterson in 2010.

Former Hughson City manager Bryan Whitemyer said Souza was a hero for agreeing to help this small community of 8,000 people. avoid bankruptcy in the years following the financial crisis.

Whitemyer said Hughson had already laid off nearly half of his 27 employees and needed someone to work part-time on the city budget.

He said Souza and a second retired employee, Linda Abid-Cummings, who was part-time director of administrative services for Hughson, helped fix the town’s financial books.

CalPERS is also seeking approximately $ 47,000 from Abid-Cummings, who retired in 2011 from the town of Riverbank.

“The tragedy of this decision is that the individuals helped the Town of Hughson to become solvent so that we could continue to pay CalPERS premiums,” Whitemyer said. “Yet these individuals are penalized. It just doesn’t make sense to me.

CalPERS ROI struggles financially

Souza’s attorney Scott Kivell said Souza was earning much less than the amount she is obligated to repay and that CalPERs declined to provide an explanation,

He said repayment would be a major problem for the retired woman.

“The result would be disastrous for Ms. Souza,” he said. “She is now of an advanced age and cannot secure a meaningful comparable position that would provide her with an income to pay off this debt to CalPERS.”

In one case, one of the CalPERS retirees requesting the reimbursement died. Douglas Breeze passed away several months ago, meaning his widow would be forced to make a potential payment of around $ 9,500.

Breeze worked for the City of Atascadero part-time in 2013 and 2014, performing public works management duties at a rate of $ 750 per day. He accepted the post after the retirement of the city’s director of public works. Breeze himself retired in 2007 from the post of Director of Public Works in Ojai City.

A fifth employee, David Dowswell, who worked as director of community services for the town of Dixon, is only cited for less than three months from April 28 to July 1, 2015 for breaking employment rules after retirement. He is being asked to return about $ 11,000.

Sandhu, who helps support two grown children and his wife, said returning the $ 52,000 to CalPERS would be a major financial hardship.

He said his CalPERS retirement benefit of $ 66,000 per year is his main source of income.

And this time, he’s no longer looking for part-time jobs.

“I am too old to work again,” he said.

This story was originally published November 17, 2021 5:25 am.

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