During years of prodigious investment returns, the Stanislaus County Employees' Retirement Association will use the earnings to strengthen the local government pension fund, instead of giving extra benefits to retirees.
The StanCERA board on Tuesday approved changes to its excess earnings policy, which previously diverted tens of millions of dollars into a supplemental benefits fund for retirees.
StanCERA administers more than $1 billion in retirement benefits for employees of the county, Ceres, the Superior Court and five special districts.
Before the retirement board suspended the benefits last year, StanCERA retirees often were given a medical stipend — up to $370 a month — and older members received supplemental cost-of-living increases.
None of those benefits were part of negotiated labor agreements with employers.
Some county officials blame the old excess earnings policy for weakening the fund used for making monthly pension payments. When investment returns exceeded 8.16 percent, the retirement board often committed the extra earnings to supplemental benefits instead of bolstering the main pension fund.
The revised excess earnings policy is far more restrictive. The retirement board won't consider funding the extra benefits unless the pension system is at least 90 percent funded.
StanCERA can dedicate 25 percent of excess earnings to supplemental benefits if the system is 90 percent to 100 percent funded. The other 75 percent will be used to fund the pension liability.
If the system is 100 percent funded or more, 50 percent of extra earnings can be used for supplemental benefits at the board's discretion.
The benefits may include annual payments of up to $3,600 to help retirees buy health insurance and a supplemental cost-of-living allowance for retired members who have lost 20 percent of their purchasing power.
Bee staff writer Ken Carlson can be reached at email@example.com or 578-2321.