California high court upholds pension rollback

The California Supreme Court has upheld former Gov. Jerry Brown's rollback of a retirement benefit that allowed public workers to pad their pensions, but avoided ruling on the larger issue of whether promised retirement benefits can ever be taken away.

At issue in the unanimous decision was a provision of a 2012 pension reform law that eliminated the ability of public workers to pay for more years of service for a more lucrative pension when they retire. The law sought to rein in costs and end practices viewed as abuses of the system.

Attorneys for a union argued that the elimination of service credits violated a long line of state court rulings that have made pension benefits for existing employees sacrosanct.

The justices during a hearing in the case in December appeared inclined to sidestep the larger issue over the sanctity of pension benefits under the so-called "California Rule," which dates back to court rulings beginning in 1947. It says workers enter a contract with their employer on their first day of work, entitling them to retirement benefits that can never be diminished unless replaced with similar benefits.