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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

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

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

  • Former state employees who return to state employment on or after January 15, 2011.
  • State employees hired prior to January 15, 2011 who were subject to the Alternate Retirement Program (ARP).
  • State employees on approved leave of absence prior to January 15, 2011 who return to active employment on or after January 15, 2011.
  • Persons who are already members or annuitants of the California Public Employees Retirement System as a state employee 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 age/benefit factors for First Tier A, First Tier B, and PEPRA First Tier formulas.

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 are hired prior to January 15, 2011

Employees first hired on and after prior to January 15, 2011 and prior to January 1, 2013

Employees eligible for CalPERS Membership for the first time on an after January 1, 2013

50

1.100

1.092

N/A

51

1.280

1.156

N/A

52

1.460

1.224

1.00

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

 

E. Employment Retirement Contribution

As stated in Government Code Section 20677.71, effective May 16, 2011, miscellaneous and industrial members in the First Tier retirement or the ARP, subject to social security, shall contribute eight percent (8%) of monthly compensation in excess of $513 for retirement.

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.

F. 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 1, 2007, 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 1, 2007, is based on the highest average monthly pay rate during thirty-six (36) consecutive months of employment.

8.2 Retirement – Safety Members: State Safety A Formula (2.5% at age 55), State Safety B Formula (2% at age 55) and Public Employees’ Pension Reform Act (PEPRA) State Safety Formula (2% at age 57)

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 are subject to the State Safety B Retirement Formula.  The State Safety B Retirement formula does not apply to:

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

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 the current and proposed 2011 State Safety age/benefit factors.

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

1.700

1.426

1.426

51

1.800

1.522

1.508

52

1.900

1.628

1.590

53

2.000

1.742

1.672

54

2.250

1.866

1.754

55

2.500

2.000

1.836

56

N/A

N/A

1.918

57 and over

N/A

N/A

2.000

E. 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.

F.  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 1, 2007, 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 1, 2007, is based on the highest average monthly pay rate during thirty-six (36) consecutive months of employment.

8.3 Second-Tier Retirement Plan

Unit 10 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 memberships for the first time on or after January 1, 2013 and who are not eligible for reciprocity with another California public employers 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

 

D. 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.

E. 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 1, 2007, 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 1, 2007, is based on the highest average monthly pay rate during thirty-six (36) consecutive months of employment.

8.4 Savings Plus Program

A. The Savings Plus Program is comprised of an IRC 457 plan, and IRC 401(k) plan. All Unit 10 employees shall be eligible to participate in these program options. Participation shall be voluntary.

B. The Savings Plus Program shall maintain a brokerage option available to all participants. The brokerage option offered shall provide the broadest array and number of investments practicable included in the program. All costs for the brokerage option shall be paid by participants enrolled in the brokerage program.

C. CalHR agrees to continue the Savings Plus Advisory Committee. Members shall include CalHR staff and interested management, legislative and employee organization representatives.

8.5 Items Excluded from Compensation for Retirement Purposes

The State and CAPS agree that the following items shall be excluded from compensation for the purposes of retirement contributions:

ARTICLE/SECTION TITLE

Article 6, Section 4

Uniform Replacement Allowance
Article 2, Section 7 Diving Pay
Article 19, Section 6 Transportation Incentives

8.6 Enhanced Industrial Retirement

The state agrees to provide enhanced industrial disability benefits as described in Government Code Section 20047 when a Unit 10 scientist has been injured as a result of a violent act by a patient or client in a forensic facility.

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 States 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.

8.7 Tax Treatment of Employee Retirement Contributions

In accordance with that Executive Order and with Internal Revenue Service guidance under Revenue Ruling 2006-43, this formalizes the implementation of section 414(h)(2) with regard to Employee Contributions to CalPERS that are made by the Employer on behalf of its employees.  For this purpose, “Employee Contributions” means those contributions that are deducted from employees’ salary and credited to individual employees’ accounts under CalPERS.  This Article specifically covers Employee Contributions made on behalf of employees covered by the collective bargaining agreement to which the Article relates.

A.  Pick-up of Employee Contributions

In accordance with section 414(h)(2) of the Internal Revenue Code, the Employer may “pick up” the Employee Contributions under the following terms and conditions:

  • The contributions made by the Employer to CalPERS, although designated as Employee Contributions, are being paid by the Employer in lieu of contributions by the employees who are members of CalPERS;
  • Employees do not have the option of choosing to receive the contributed amounts directly instead of having them paid by the Employer to CalPERS;
  • The Employer is paying to CalPERS the contributions designated as Employee Contributions from the same source of funds as used in paying salary; and
  • The amount of the contributions designated as Employee Contributions and paid by the Employer to CalPERS on behalf of an employee is the entire contribution required of the employee under CalPERS.

B.  Tax Characterization of Picked-up Employee Contributions

All Employee Contributions picked up by the Employer in accordance with Section 414(h)(2) of the Internal Revenue Code are, for tax purposes, treated as employer contributions and therefore are not includable in employee’s taxable income until distributed from CalPERS.  This Article formalizes the Employer’s continuing characterization of Employee Contributions as employer contributions under section 414(h)(2).  Accordingly, Employee Contributions covered by this Article will continue to be excluded from employees’ taxable income under section 414(h)(2).

C.  Wage Adjustment

Notwithstanding anything to the contrary, employees’ salary will be reduced by the amount of Employee Contributions that are made by the Employer in accordance with the terms of this Article.

D.  Limitations to Operability

This Article will be operative only as long as the Employer pick-up of Employee Contributions continues to be excludable from employees’ taxable income under the Internal Revenue Code.

E.  No Arbitration

The parties agree that nothing in this Article will be subject to the grievance and arbitration procedures set out in the collective bargaining agreement to which the Article applies.