US - A US court has issued a ruling requiring the State of California to pay the California State Teachers' Retirement System (CalSTRS) US$500m plus interest, regarding a withheld payment for the fiscal year 2003-2004.
A three-member panel from the Third District Court of Appeal in Sacramento unanimously decided the state had violated its contractual obligation to the $169bn pension fund when it withheld its contribution to CalSTRS’ inflation-protection programme, the Supplemental Benefit Maintenance Account (SBMA).
Dana Dillon, chair of the Teachers' Retirement Board said: “The court spoke loud and clear today. The state cannot interfere with promised benefits to teachers. We entered into litigation and also sought to work with the administration for a remedy. Our most vulnerable members, those who are longest retired and most dependent on these benefits, are the true winners in this ruling.”
CalSTRS estimated that the total interest could exceed $200m.
The case originates from 2003, when governor Gray Davis signed Senate Bill 20, which withheld a $500m payment to the SMBA that year.
The SBMA currently funds quarterly payments to approximately 63,000 retired educators and their survivors when inflation erodes their monthly benefit below 80% of its original consumer purchasing power.
The Court of Appeal decision supports a ruling by the Sacramento County Superior Court in May 2005 ordeRING the state to repay CalSTRS. The Department of Finance also filed an appeal in September 2005.
Stephen Jones says the broader 'outside' world might be fraught with challenges, but companies are prospering and voicing few concerns. However, caution is warranted
This week's top stories included the 'Buck' name being revived as Conduent sold off the HR consulting business to a private equity investor.
Royal London saw its new group pension business decline over the first half of 2018 as the rollout of auto-enrolment (AE) drew to a close, according to its interim results.
Now Pensions has made "huge progress" in resolving legacy administration issues - switching systems and completing unit adjustment for a "large proportion" of members, it says.