California Legislature Moves to Weaken Pension Safeguards

New bill threatens to undo reforms adopted in 2012 to address pension funding crisis

Mar. 14, 2026 at 12:48am

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The California Legislature is poised to pass a new bill, Assembly Bill 1383, that would weaken many of the pension reform measures adopted in 2012 under the Public Employees' Pension Reform Act. The 2012 reforms were enacted to address the state's pension funding crisis, which was exacerbated by overly optimistic assumptions about investment returns in the late 1990s. However, the new bill is expected to roll back these safeguards, raising concerns about the long-term fiscal health of local governments dominated by public sector unions.

Why it matters

The 2012 pension reforms were a hard-fought bipartisan effort to rein in unsustainable pension obligations that were straining state and local budgets. Undoing these reforms could lead to a resurgence of pension-related fiscal challenges for many California municipalities, potentially forcing service cuts or tax increases to cover growing pension liabilities.

The details

Assembly Bill 1383 would weaken several key elements of the 2012 pension reform law, including provisions that capped pension benefits, increased employee contributions, and prohibited retroactive pension increases. The new bill is expected to pass both the state Assembly and Senate, which are controlled by Democratic majorities aligned with public sector unions.

  • In 1999, the California Legislature voted overwhelmingly to increase pension benefits based on overly optimistic investment return projections.
  • In 2012, the Public Employees' Pension Reform Act was enacted under Governor Jerry Brown to address the resulting pension funding crisis.
  • In 2026, the California Legislature is poised to pass Assembly Bill 1383, which would roll back many of the 2012 pension reform measures.

The players

California Legislature

The state legislature of California, which is currently controlled by Democratic majorities and is expected to pass Assembly Bill 1383 to weaken pension reform safeguards.

Jerry Brown

The former Governor of California who shepherded the passage of the Public Employees' Pension Reform Act in 2012 to address the state's pension funding crisis.

Assembly Bill 1383

A new bill in the California Legislature that would weaken many of the pension reform measures adopted in 2012 under the Public Employees' Pension Reform Act.

California Public Employees' Retirement System (CalPERS)

The state's public pension system, whose overly optimistic investment return projections in the late 1990s contributed to the pension funding crisis that led to the 2012 reforms.

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What they’re saying

“We must not let the legislature undo the hard-won pension reforms that have helped stabilize local government finances.”

— Jerry Brown, Former Governor of California

What’s next

The California Assembly and Senate are expected to vote on Assembly Bill 1383 in the coming weeks. If passed, the bill would then go to the governor for signature or veto.

The takeaway

The proposed rollback of pension reforms in California highlights the ongoing tension between the fiscal sustainability of public pension systems and the political influence of public sector unions. This debate will likely continue to play out in statehouses across the country as governments grapple with the long-term costs of public employee retirement benefits.