San Francisco Court Rolls Back Portion of Pension Cuts

About 23,000 San Francisco workers will enjoy new cost-of-living increases during retirement after a court restored the annual benefit boosts over the weekend.

In 2011, voters approved a measure – Proposition C – that eliminated pension COLAs for retirees in years when the pension fund wasn’t “fully funded”.

But over the weekend, a court ruled that the measure violated the vested rights of some employees.

From SFGate:

A state appeals court has overturned part of the pension cutbacks for city employees that San Francisco voters approved in November 2011, a reduction of cost-of-living increases for retirees when their pension fund was earning more than previously expected.

[…]

Prop. C allowed the added cost-of-living increases only in years when the retirement fund was considered “fully funded.” While the ballot measure argued that it merely clarified the previous voter-approved laws, the First District Court of Appeal said Friday it was actually a cutback that would eliminate the increased payments in some years when the fund had exceeded its projected earnings.

That violates the vested rights of employees who retired after November 1996, when the new benefits were first approved, Justice Henry Needham said in the 3-0 ruling. The ruling overturned an earlier decision in the city’s favor by Superior Court Judge Richard Kramer.

“Upon accepting public employment, one acquires a vested right to a pension based on the system then in effect, and to additional pension benefits conferred during his or her subsequent employment,” Needham said.

The city may appeal the ruling to the Supreme Court.

Photo by ilirjan rrumbullaku via Flickr CC License