EEOC: Public Safety Officers To Get $250M In CalPERs Suit

By Tim Paradise, DOW JONES NEWSWIRES

 January 30, 2003

SAN FRANCISCO -- More than 1,700 police and firefighters in California will share in a settlement - estimated to be worth $250 million - of an age-discrimination case that pitted older workers injured on the job against the state's huge pension system, CalPERS.

In announcing the settlement of the suit that began in 1995, the Equal Employment Opportunity Commission said in a statement Thursday that the California Public Employees' Retirement System will pay about $50 million retroactively and about $200 million in future benefits.

Representatives from CalPERS, the nation's largest public pension plan with about $133 billion in assets, weren't immediately available to comment on the settlement with the EEOC.

Under the settlement - the largest ever recovered by the EEOC - most of the recipients will be paid in increments over their lifetimes.

David F. Offen-Brown, a senior EEOC attorney on the case, said in a telephone interview that CalPERS will likely boost the assessments it charges police forces and fire departments for retirement costs by about 4%. Stressing that the estimates are rough, he said the anticipated increase in assessments reflects the costs of the $50 million in back benefits and the additional $200 million that CalPERS will have to pay because of changes to its compensation guidelines.

"It's a very large number, but spread over time it's relatively affordable for everybody," he said. CalPERS will likely amortize the cost of the back pay over 13 years, he said.

The case began in 1995 when Ron Arnett, a former Fremont, Calif., police officer, and six other disabled retirees filed suit alleging they were discriminated against because their injury benefits varied depending on the age at which they were hired. Injured workers hired at an older age received less than those hired at a younger age, the suit said.

The groups involved in the case reached a partial settlement in August 2001, but a consent decree at the time didn't cover retroactive pay. At that time, though, CalPERS agreed to change the practice going forward.

-Tim Paradis; Dow Jones Newswires; 201-938-5400

CalPERS, in a statement later Thursday, described the EEOC settlement as "a fair resolution" that doesn't jeopardize the fund.

"I am pleased that we were able to come together to come up with a fair resolution which conforms with the requirements of the Age Discrimination Employment Act," CalPERS General Counsel Peter Mixon said.

CalPERS said the fund is fully funded to meet benefit payments.

CalPERS noted that the settlement frees it from following a state law enacted in the 1980s that it said led to the dispute. The pension plan said its board attempted on several occasions to have the law repealed, but was unsuccessful. CalPERS said the law was aimed at preventing workers from receiving more in a disability retirement than they would otherwise have received after working a full career and retiring.