California justices to rule on closely watched pension suit

The California Supreme Court will rule today on a closely watched lawsuit that has the potential to upend California's long-held rule that retirement benefits for government workers can never be taken away once promised.

At issue in the decision is 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 — backed by former Gov. Jerry Brown — 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 California 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.

Roughly a dozen states observe a variation of the California Rule, so a decision repudiating it could have implications beyond California.