Retirement benefit formulas and contribution rates for State employees are specified in the Government Code as summarized below. No provision of this article shall be deemed grievable or arbitrable under the grievance and arbitration procedure, except any claim of clerical error concerning an employee’s retirement benefit shall be grievable up to CalHR’s level.

11.1 First Tier Eligibility for Employees in Second Tier

New employees who meet the criteria for CalPERS membership are enrolled in the First Tier plan and have the right to be covered under the Second Tier plan within 180 days of the date of their appointment. If a new employee does not make an election for Second Tier coverage during this period, he or she would remain in the First Tier plan.

An employee in the Second Tier may exercise the Tier 1 right of election at any time. An employee who makes this election is eligible to purchase past Second Tier service. The parties will work with CalPERS to establish more flexible purchase provisions for employees. These include, but are not limited to, increasing the installment period from 96 months (8 years) to 144 months (12 years) or up to 180 months (15 years), and allowing employees to purchase partial amounts of service.

Employees who purchase their past service are required to pay the amount of contributions they would have paid had they been First Tier members during the period of service that they are purchasing. As required by CalPERS law, the amount includes six percent (6%) interest, compounded annually.

11.2 401(k) Deferred Compensation Program

Employees in Unit 9 may participate in the State of California, Department of Human Resources, existing 401(k) Deferred Compensation Program.

11.3 457 Deferred Compensation Program

Employees in Unit 9 may participate in the current State of California, Department of Human Resources, 457 Deferred Compensation Program.

11.4 Tax Deferral of Lump Sum Leave Cash Out Upon Separation

A. Effective October 31, 2002, to the extent permitted by federal and state law, employees who separate from State service who are otherwise eligible to cash out their vacation and/or annual leave balance, may ask the State to tax defer and transfer a designated monthly amount from their cash payment into their existing 457 and/or 401k plan offered through the State’s Savings Plus Program (SPP).

B. If an employee does not have an existing 457 and/or 401k plan account, he/she must enroll in the SPP and become a participant in one or both plans no less than 60 days prior to his/her date of separation.

C. Such transfers are subject to and contingent upon all statutes, laws, rules and regulations authorizing such transfers including those governing the amount of annual deferrals.

D. Employees electing to make such a transfer shall bear full tax liability, if any, for the leave transferred (e.g., “over-defers” exceeding the limitation on annual deferrals).

E. Implementation, continuation and administration of this section is expressly subject to and contingent upon compliance with the SPP’s governing Plan document (which may at the State’s discretion be amended from time to time), and applicable federal and state laws, rules and regulations.

11.5 Determination of Safety Retirement Eligibility

The provisions of Government Code sections 19816.20 and 20405.1 shall apply to Unit 9.

11.6 State Safety A Retirement Formula (2.5% at age 55), State Safety B Retirement Formula (2% at age 55), and Public Employees’ Pension Reform Act (PEPRA) State Safety Formula (2% at age 57)/Employee Contributions/Final Compensation

A. State Safety retirement members first employed by the State prior to January 15, 2011 are subject to the State Safety A retirement formula.

B. State Safety retirement members first employed by the State on or after January 15, 2011 and prior to January 1, 2013 and qualify for CalPERS membership are subject to the State Safety B Retirement Formulas. The State Safety B Retirement Formula does not apply to:

  1. Former state employees who return to state employment on or after January 15, 2011.
  2. State employees hired prior to January 15, 2011 who were subject to the Alternate Retirement Program (ARP).
  3. State employees on approved leave of absence prior to January 15, 2011 who return to active employment on or after January 15, 2011.
  4. Persons who are already members or annuitants of the California Public Employees Retirement System as state employees prior to January 15, 2011.

The above categories are subject to the State Safety A Retirement formula.

C. Employees who are brought into CalPERS membership for the first time on or after January 1, 2013 and who are not eligible for reciprocity with another California public employer as provided in Government Code Section 7522.02(c) shall be subject to the “PEPRA Retirement Formula.” As such the PEPRA changes to retirement formulas and pensionable compensation caps apply only to new CalPERS members subject to PEPRA as defined under PEPRA.

D. The table below lists State Safety age/benefit factors for State Safety A, State Safety B, and PEPRA State Safety.

 

Age at
Retirement

State Safety A Formula
(2.5% at age 55)
G.C. 21369.1

State Safety B Formula
(2% at age 55)
G.C. 21369

PEPRA State Safety Formula
(2% at age 57)
G.C. 7522.25(b)

 

Employees hired prior to January 15, 2011

Employees first hired on and after January 15, 2011 and prior to January 1, 2013 Employees eligible for CalPERS Membership for the first time on and after January 1, 2013
50 1.7000 1.426 1.426
51 1.8000 1.522 1.508
52 1.9000 1.628 1.590
53 2.0000 1.742 1.672
54 2.2500 1.866 1.754
55 and over 2.5000 2.000 1.836
56 N/A N/A 1.918
57 and over N/A N/A 2.000
  1. Employee Retirement Contribution

As stated in Government Code Section 20683.2, State Safety members shall contribute an additional one percent (1%) retirement contribution. Effective July 1, 2013, State Safety members shall contribute ten percent (10%) of monthly pensionable compensation in excess of $317 for retirement.

Effective July 1, 2014, State Safety members shall contribute an additional one percent (1%) retirement contribution. State Safety members shall contribute eleven percent (11%) of pensionable compensation in excess of $317 for retirement.

  1. Final Compensation

Final Compensation for an employee who is employed by the State for the first time and becomes a member of CalPERS prior to January 15, 2011, is based on the highest average monthly pay rate during twelve (12) consecutive months of employment.

Final Compensation for an employee, who is employed by the State for the first time and becomes a member of CalPERS on or after January 15, 2011, is based on the highest average monthly pay rate during thirty-six (36) consecutive months of employment.

E. Miscellaneous/Industrial-First Tier Members: First Tier A (2% at age 55), First Tier B (2% at age 60), and (PEPRA) First Tier (2% at age 62) Formulas/ Contribution Rate/Final Compensation Earnable

A. First Tier Miscellaneous/Industrial retirement members first employed by the State prior to January 15, 2011 are subject to the First Tier A retirement formula.

B. First Tier Miscellaneous/Industrial retirement members first employed by the State on or after January 15, 2011 and prior to January 1, 2013 and qualify for CalPERS membership are subject to the First Tier B Retirement Formulas. The First Tier B Retirement Formula does not apply to:

  1. Former state employees who return to state employment on or after January 15, 2011.
  2. State employees hired prior to January 15, 2011 who were subject to the Alternate Retirement Program (ARP).
  3. State employees on approved leave of absence prior to January 15, 2011 who return to active employment on or after January 15, 2011.
  4. Persons who are already members or annuitants of the California Public Employees Retirement System as state employees prior to January 15, 2011.

The above categories are subject to the First Tier A retirement formula.

C. Employees who are brought into CalPERS membership for the first time on or after January 1, 2013 and who are not eligible for reciprocity with another California public employer as provided in Government Code Section 7522.02(c) shall be subject to the “PEPRA Retirement Formula.” As such, the PEPRA changes to retirement formulas and pensionable compensation caps apply only to new CalPERS members subject to PEPRA as defined under PEPRA.

D. The table below lists the First Tier age/benefit factors for First Tier A, First Tier B, and PEPRA First Tier.

 

 


Age at
Retirement

First Tier A Formula
(2% at age 55)
First Tier B Formula
(2% at age 60)
PEPRA Formula
(2% at age 62)
Employees hired prior to January 15, 2011 Employees first hired on and after January 15, 2011 and prior to January 1, 2013 Employees eligible for CalPERS Membership for the first time on and after January 1, 2013
50 1.100 1.092 N/A
51 1.280 1.156 N/A
52 1.460 1.224 1.000
53 1.640 1.296 1.100
54 1.820 1.376 1.200
55 2.000 1.460 1.300
56 2.064 1.552 1.400
57 2.126 1.650 1.500
58 2.188 1.758 1.600
59 2.250 1.874 1.700
60 2.314 2.000 1.800
61 2.376 2.134 1.900
62 2.438 2.272 2.000
63 2.500 2.418 2.100
64 2.500 2.418 2.200
65 2.500 2.418 2.300
66 2.500 2.418 2.400
67 2.500 2.418 2.500
  1. Employee Retirement Contribution

As stated in Government Code Section 20682, effective May 16, 2011, miscellaneous and industrial members in the First Tier retirement or the Alternate Retirement Plan (ARP) subject to social security shall contribute eight percent (8%) of monthly compensation in excess of $513 for retirement.

As stated in Government Code Section 20682, effective May 16, 2011, miscellaneous and industrial members in the First Tier retirement or the ARP not subject to social security shall contribute nine percent (9%) of monthly compensation in excess of $317 for retirement.

As stated in Government Code Section 20683.2, industrial members shall pay an additional one percent (1%) employee retirement contribution to retirement. Effective July 1, 2013, industrial members subject to social security shall contribute nine percent (9%) of pensionable compensation in excess of $513 to retirement. Industrial members not subject to social security shall contribute ten percent (10%) of pensionable compensation in excess of $317 to retirement.

  1. Final Compensation

Final Compensation for an employee, who is employed by the State for the first time and becomes a member of CalPERS prior to January 15, 2011, is based on the highest average monthly pay rate during twelve (12) consecutive months of employment.

Final Compensation for an employee, who is employed by the State for the first time and becomes a member of CalPERS on or after January 15, 2011, is based on the highest average monthly pay rate during thirty-six (36) consecutive months of employment. 

Second-Tier Retirement Plan

Unit 9 members may participate in the Second-Tier retirement plan as prescribed by Government Code Section 21070.5.

A. Second Tier members first employed by the State and subject to CalPERS membership prior to January 1, 2013 are subject to the Pre-PEPRA Second Tier retirement formula.

B. Employees who are brought into CalPERS membership for the first time on or after January 1, 2013 and who are not eligible for reciprocity with another California public employer as provided in Government Code Section 7522.02(c) shall be subject to the “PEPRA Retirement Formula.” As such, the PEPRA changes to retirement formulas and pensionable compensation caps apply only to new CalPERS members subject to PEPRA as defined under PEPRA.

C. The table below lists the Second Tier age/benefit factors for the Pre-PEPRA and PEPRA retirement formulas.

 

 

Age at
Retirement

Pre-PEPRA Formula
(1.25% at age 65)
PEPRA Formula
(1.25% at age 67)
Employees first hired and subject to CalPERS membership prior to January 1, 2013 Employees eligible for CalPERS Membership for the first time on and after January 1, 2013
50 0.5000 N/A
51 0.5500 N/A
52 0.6000 0.6500
53 0.6500 0.6900
54 0.7000 0.7300
55 0.7500 0.7700
56 0.8000 0.8100
57 0.8500 0.8500
58 0.9000 0.8900
59 0.9500 0.9300
60 1.0000 0.9700
61 1.0500 1.0100
62 1.1000 1.0500
63 1.1500 1.0900
64 1.2000 1.1300
65 1.2500 1.1700
66 1.2500 1.2100
67 1.2500 1.2500
  1. Employee Contribution

As stated in Government Code Section 20683.2, effective July 1, 2013, Second Tier members, including ARP members, shall contribute one and one-half percent (1.5%) of monthly pensionable compensation for retirement, and will increase by 1.5% points annually.  The final annual increase in the contribution rate shall be adjusted as appropriate to reach fifty percent (50%) of normal cost.

  1. Final Compensation

Final Compensation for an employee, who is employed by the State for the first time and becomes a member of CalPERS prior to January 15, 2011, is based on the highest average monthly pay rate during twelve (12) consecutive months of employment.

Final Compensation for an employee, who is employed by the State for the first time and becomes a member of CalPERS on or after January 15, 2011, is based on the highest average monthly pay rate during thirty-six (36) consecutive months of employment.

Public Employees’ Pension Reform Act of 2013 (PEPRA)

A. PEPRA Definition of “Pensionable Compensation”

Retirement benefit for employees subject to PEPRA are based upon the highest average pensionable compensation during a thirty-six (36) month period.  Pensionable compensation shall not exceed the applicable percentage of the contribution and benefit base specified in Title 42 of the United State Code Section 430 (b).  The 2013 limits are $113,700 for members subject to Social Security and $136,440 for members not subject to Social Security.  The limit shall be adjusted annually based on changes to the Consumer Price Index for all Urban Consumers.

B. Alternate Retirement Program – New Employees

Employees first hired on or after July 1, 2013 shall not be subject to the Alternate Retirement Program (ARP).  Existing ARP members are required to complete the twenty-four (24) month enrollment period.  Upon completion of the twenty-four (24) month period, the employee shall make contributions to CalPERS.  ARP members shall continue to be eligible for payout options beginning the first day of the 47th month of employment and ending on the last day of the 49th month of employment following his or her initial ARP hire date.