IDR

According to CalPERS, industrial disability means the inability to perform your duties because of a job-related injury or illness, which is, expected to be permanent or to last indefinitely. Industrial Disability Retirement (IDR) is available to members classified as State Safety, State Peace Officer/Firefighter, State Patrol, Local Safety, School Safety, State Industrial and State Miscellaneous, and to Local Miscellaneous members whose employers contract for the benefit. For IDR to apply, the injury giving rise to the disability must be a job-related illness or injury. There is no minimum period of employment before a member is eligible for an IDR. IDR’s granted to qualified safety class members can be very costly to a municipality. Typically, IDR is preceded by an employee having received workers’ compensation benefits. Similar to other retirement costs, IDR’s are paid from the Public Employees’ Retirement Fund, which is supported by employer and employee contributions. Unlike regular service retirements, IDR retirees do not pay state or federal income taxes on half of their annual pension amount. Claims adjusters who handle workers’ compensation claims for safety officers need to be intimately familiar with the requirements of an IDR when a safety officer suffers a serious injury that may render him unable to return to regular duty. In those cases, the defense of a workers compensation case must be handled with an eye toward the defense of the potential IDR. According to Cal-Tax, IDR’s constitute ―a drain on human resources and finances of state and local governments.‖ Under current law, employees can claim disability retirement benefits even though subsequently beginning a second career. To qualify for disability, employees need not show they are incapable of working — just that they are incapable of performing their current job assignment. The disability retirement benefit is a minimum of 50 percent of salary. It is tax free, and is paid for life. There are no limitations on subsequent earnings.[i] A 1992 examination by the San Jose Mercury News found that many safety employees plan for their eventual disability retirement. Some agencies have incredible rates of disability among their retirees. San Jose tops the list with 81% of all safety retirees receiving a disability retirement. The Mercury News found that 68% of California Highway Patrol retirees go out on disability. Possible reforms include discontinuing the IDR for any period of time the disabled employee participates in similar work with another public agency, raising the age limit for the employer to reevaluate disability status of the IDR recipient, and disallowing employees that qualify for an IDR and

regular service retirement to receive both benefits. In addition, the determination of the IDR should be based upon predominant cause[ii], and rebuttal presumptions[iii] should not constitute causation. Another possible reform is to eliminate overlapping IDR benefits and workers’ compensation benefits when payable for the same injury by establishing an offset between the two systems.[iv] Lastly, if the preceding cost-saving reforms are achieved, IDR benefits should be increased for employees who are totally disabled from any work.[v] In 1994, the California State Auditor recommended reforming the Public Employees’ Retirement System (PERS), the City of Los Angeles Fire and Police Pension Systems and the San Diego County Employees’ Retirement Association by apply earning limitations to retirees receiving IDR benefits who are earning income that, combined with their benefits, exceeds their pre-retirement income.[vi] Assembly Bill 2244 was passed and became effective on January 1, 2007. This bill returns the law to the standards for evaluating a disability retirement set prior to the California Supreme Court decision, Nolan v. City of Anaheim, and once again requires only that a member establish substantial incapacity from his/her usual duties. The employer must participate in the IDR determination by CalPERS and complete approximately six forms. Typically, members apply to CalPERS and/or their local agency or governing board for a disability determination. CalPERS manages pension and health benefits for more than 1.6 million California public employees, retirees, and their families.[vii] As of December 2008, CalPERS managed the largest public pension fund in the United States with $179.2 billion in assets. Unfortunately, state law forbids CalPERS from requiring disabled retirees who are 50 or older to submit to another medical evaluation, even if there is evidence of possible fraud.[viii] The State’s workers’ compensation system is directed by laws contained in the Labor Code and precedent-setting case decisions by the Workers’ Compensation Appeals Board (WCAB). In addition, the State’s disability retirement system is directed by the Public Employees’ Retirement Law.

[i] Cal-Tax <http://www.caltax.org/documents/1995/plan.htm#6>. [ii] Predominant Cause – job-connected injury or illness is the principal cause of the disability [iii] Rebuttal Presumption – disabling injuries include cancer, pneumonia, meningitis, hernia, blood-borne pathogen, biochemical substances, and

lower back issues [iv] SB 916 (Speier) and AB 514 (Richman) [v] CSAC Pension Reform Issues: Industrial Disability Retirement (IDR) <http://www.csac.counties.org/images/public/Advocacy/employee_relations /idr_reform.pdf>. [vi] California State Auditor, Report 93105 Summary <http://www.bsa.ca.gov/reports/summary/93105>. [vii] CalPERS. (2011, October 16). In Wikipedia, The Free Encyclopedia. [viii] Lee, Vic, More questions in CHP disability fraud probe, KGO TV, November 24, 2006.