California Assembly Bill 1383 would have let employers offer police officers and firefighters more generous pension terms, including a lower retirement age and a higher cap on pensionable income. Governor Gavin Newsom vetoed it on September 20, 2026. The veto was justified: the proposal risked loosening cost-control safeguards adopted after California’s pension crisis, while its likely costs depended on employer choices and remain disputed. Calling it a “pension bomb” is an argument, not an established actuarial verdict.
What AB 1383 would have changed
AB 1383, authored by Assemblymember Tina McKinnor, proposed expanding retirement benefits for police and firefighters. News coverage describes two central changes: a lower age at which eligible employees could retire and a higher limit on the income used to calculate their pensions.
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The bill did not automatically give every covered worker the enhanced formula. Employers could elect to offer it, so the fiscal effect would depend partly on which employers adopted the terms and which employees were covered. That distinction matters: a statewide estimate of potential contributions is not the same as a guaranteed cost for every local agency.
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The Legislature passed the measure with near-unanimous support, according to CalMatters; only two Assembly members voted against it. Its support reflects a real policy argument: public-safety employers and unions say competitive retirement benefits can help with recruitment and retention. Those needs can vary by occupation and employer, and the case for them does not by itself settle how much a benefit change should cost taxpayers.
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Why Newsom vetoed the bill
Newsom’s veto rationale was that AB 1383 would partly reverse safeguards established by the Public Employees’ Pension Reform Act, or PEPRA, and increase costs for state and local government. His message described PEPRA as a necessary reform born of a crisis worsened by earlier policy decisions.
Enacted in 2012 and effective in 2013, PEPRA included higher retirement ages for affected new employees, lower benefit formulas, limits on pensionable compensation and a greater employee share of pension costs. These measures were designed to constrain long-term public pension costs. A bill that relaxes some of those limits deserves scrutiny even when it applies to a specific group and employers may choose whether to adopt it.
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That is the strongest case for the veto: reopening benefit terms can create obligations that persist well beyond the legislative session, while a recruitment benefit is an immediate policy response whose effectiveness and cost need to be weighed carefully. The available estimates do not establish that every increase is unaffordable, or that police and firefighters have identical workforce needs. They do show why the state should not treat expanded benefits as cost-free.
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There is no single figure in the cited reporting that can be treated as a definitive price tag. The estimates come from different sources and describe different things:
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| Figure | Source and scope | How to read it |
|---|---|---|
| $282 million | CalPERS estimate reported by CalMatters in 2026, for additional employer and employee contributions associated with the proposed lower retirement age and higher pensionable-income cap. | This is a contribution estimate tied to those proposed changes. It is not the same measure as the advocacy-group estimates below. |
| At least $338 million in new annual costs for local governments and school districts | California Policy Center estimate reported by California Insider in 2026. | This is an advocacy-group estimate of annual local costs, not a CalPERS estimate. |
| At least $3.6 billion in increased state liabilities | California Policy Center estimate reported by California Insider in 2026. | This is a liability estimate, not an annual contribution figure. It should not be added to the local annual-cost estimate or the CalPERS figure as though all three measure the same thing. |
The figures differ in source, scope and measurement. The $282 million figure concerns contributions associated with the changes; the California Policy Center figures distinguish annual local costs from increased state liabilities. The cited reporting does not provide enough shared assumptions or methodology to reconcile the estimates into one comparable total. And because employers could choose whether to adopt the enhanced terms, actual local costs would depend partly on those decisions.
What pension contribution trends and PEPRA savings do—and do not—show
Historical contribution figures explain why lawmakers and taxpayers pay attention to pension costs, but they do not independently establish AB 1383’s marginal cost. CalPERS annual financial reports, as summarized by CalMatters in 2026, show employer contributions and payroll of $14.9 billion in fiscal year 2017 and $30.2 billion by 2025. Those figures describe a historical increase; they are not a cost estimate for this bill and do not, by themselves, show the system’s funded status.
For context on PEPRA, the California State Association of Counties relayed CalPERS estimates of $5.8 billion in savings to member agencies to date and a further $26.5 billion projected over the next decade. These are CalPERS estimates as reported by a county association, not independent proof of the bill’s cost. They indicate why public employers view PEPRA’s guardrails as fiscally significant, but they do not answer how much AB 1383 would have added under particular adoption choices.
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The bill’s bipartisan support and the recruitment argument deserve consideration, not dismissal. Former Governor Jerry Brown put the tension plainly in comments to CalMatters before the veto: “Every year there’s an effort to achieve more benefits for the organizations, and some organizations like firefighters have a much more compelling case than others, but nevertheless the government has to live within limits.”
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But the right question is not whether public-safety workers deserve competitive benefits. It is whether this particular expansion was justified, sufficiently costed and appropriately limited. On the evidence reported, the estimates are not directly comparable, the local effect would depend partly on employer adoption, and the proposal would loosen parts of a reform framework meant to contain long-term obligations. The bill’s potential workforce benefits do not erase those fiscal risks.
Newsom’s veto is final for AB 1383 in the 2026 session. That does not prove that every future pension change for police and firefighters should be rejected. It means this measure will not take effect, and any later proposal should make its assumptions, affected employers and projected long-term costs clear enough to compare with its recruitment and retention case.
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