SACRAMENTO, Calif. — A California bill that would allow richer pensions and earlier retirement for police officers, firefighters and other public-safety workers is confronting a pivotal fiscal review, while local governments warn that its passage could encourage demands for comparable increases across the public workforce.

Assembly Bill 1383, authored by Democratic Assemblymember Tina McKinnor of Inglewood, would revise portions of the California Public Employees’ Pension Reform Act, the landmark 2012 law commonly known as PEPRA. That overhaul reduced benefits for employees entering public service after Jan. 1, 2013, raised retirement ages and required workers to bear a greater share of pension costs.

The latest version of AB 1383 would establish three new formulas for safety employees first hired on or after Jan. 1, 2027: 2.5%, 2.7% or 3% of eligible compensation for each year of service at age 55. Current PEPRA formulas use the same general benefit levels at age 57. The bill also would adjust formulas for safety workers hired since 2013 for service performed beginning in 2027.

The difference can be substantial over a career. Under a 3%-at-55 formula, a qualifying employee retiring at 55 after 30 years could receive a pension calculated at 90% of eligible final compensation, subject to statutory limits and the rules of the applicable retirement system. Actual benefits would vary with service history, retirement age, compensation and the formula adopted by the employer.

The measure would not automatically require every city, county or public agency to provide the maximum benefit. It would permit public employers and recognized employee organizations to negotiate prospective increases through collective bargaining. Employers and unions also could agree to a higher or lower safety plan within the options authorized by law.

That local discretion is central to supporters’ case. Police and firefighter organizations argue that agencies should be able to use pension benefits as a recruitment and retention tool, particularly when competing for experienced personnel. They also say an age-55 benchmark better reflects careers that involve repeated exposure to violence, trauma, toxic substances, extreme heat and other hazards.

Public-safety unions have told lawmakers that extending front-line careers can increase the risk of occupational disease, injury and disability. Earlier retirement, they contend, could reduce some of that exposure and make the profession more sustainable without restoring benefits retroactively for people who have already retired.

The bill passed the Assembly and moved through the Senate Labor, Public Employment and Retirement Committee. On Aug. 3, the Senate Appropriations Committee referred it to its suspense file, the procedure used for proposals with potentially significant state costs. Measures on that file can advance, be amended or be held when the committee completes its fiscal review.

The financial consequences remain the principal objection. A recent CalPERS actuarial estimate cited in California coverage put the increase in state and local pension liabilities associated with the measure at about $4.8 billion, with employer contributions rising by roughly $233 million annually. Estimates have varied as the legislation has been amended and depending on which formulas employers ultimately adopt.

Those figures also do not capture every possible expense. Twenty California counties operate retirement systems outside CalPERS under the County Employees Retirement Law of 1937. Changes negotiated in those systems could create additional liabilities not reflected in a CalPERS-only estimate.

Groups representing cities and counties say even optional benefit increases can generate intense bargaining pressure. Pension promises are long-term obligations, while the investment income expected to pay for them is uncertain. When returns fall below assumptions, government employers and workers generally must contribute more, and local agencies may face difficult choices involving staffing, salaries, infrastructure and public services.

California’s recent pension history gives that warning particular force. The state expanded public-employee benefits near the end of the 1990s, when strong investment returns created confidence that retirement systems could absorb the cost. Market losses and the Great Recession later widened funding gaps and drove required contributions sharply higher.

Vallejo, Stockton and San Bernardino subsequently entered bankruptcy proceedings amid broader financial problems in which pension costs were a major factor. Although no single expense caused those crises, the experience shaped the political environment that produced PEPRA under former Gov. Jerry Brown.

PEPRA left benefits for existing workers and retirees largely intact but reduced the promises made to new employees. CalPERS previously estimated that the reform saved participating government agencies billions of dollars during its first decade and would produce substantially larger savings as more workers covered by the newer formulas replaced employees enrolled under earlier plans.

The debate has been complicated by CalPERS’ preliminary 14.8% investment return for the 2025-26 fiscal year, one of the system’s strongest recent performances. Supporters of enhanced benefits can point to that gain as evidence of financial capacity. Fiscal watchdogs counter that one strong year should not determine pension policy because benefits are guaranteed over decades and investment markets move in cycles.

CalPERS’ return also does not erase its unfunded liabilities. Pension systems use long-term assumptions rather than a single year’s performance, and employer contribution rates can remain elevated even after a strong market year. That distinction is especially important for cities whose police and fire payrolls already generate substantially higher retirement costs than their nonsafety workforces.

The prospect of demands from other employees may become the bill’s most consequential effect. AB 1383 is written around safety classifications, whose members face distinctive occupational risks. Nevertheless, unions representing other government workers could argue in future bargaining or legislation that their members also endured reduced benefits under PEPRA and deserve improved formulas, higher compensation limits or earlier eligibility.

Any expansion beyond safety employees would require additional negotiations or legislation, and no automatic parity provision in AB 1383 grants higher pensions to the broader workforce. Still, local-government organizations view the political precedent as a financial risk. Once lawmakers revise one of PEPRA’s central restrictions, maintaining the remaining distinctions could become more difficult.

The bill also arrives as California and many local governments face projected budget pressure. Higher pension contributions compete with current spending because governments must fund both today’s workforce and benefits accumulated for retirement. Even when an enhanced formula applies only prospectively, its costs can begin appearing in employer contribution requirements and long-range financial plans.

If AB 1383 clears the fiscal committee and wins Senate approval, it would return to the Assembly if lawmakers made amendments before going to Gov. Gavin Newsom. The governor would then decide whether the recruitment and occupational-health arguments justify partially reversing a pension framework designed to limit taxpayer exposure.

For lawmakers, the choice is not simply between supporting first responders and controlling costs. It is whether California can selectively improve benefits for hazardous public-service careers without reopening the wider pension commitments that PEPRA was enacted to restrain.