Public Employees' Pension Reform Act
The California Public Employees' Pension Reform Act (PEPRA), which took effect in January 2013, changes the way CalPERS retirement and health benefits are applied, and places compensation limits on members. The greatest impact is felt by new CalPERS members.
As defined by PEPRA, a new member includes:
- A member who joined CalPERS prior to January 1, 2013, who, on or after January 1, 2013, is hired by a different CalPERS employer following a break in service of more than six months.
- All State of California departments, including California State Universities, are considered the same state employer.
- All school county offices and districts are considered the same school employer.
- Each public agency is considered a separate employer.
- A new hire who joined CalPERS for the first time on or after January 1, 2013, and who has no prior membership in another California public retirement system
- A new hire who joins CalPERS for the first time on or after January 1, 2013, and who was a member of another California public retirement system prior to that date, but who is not subject to reciprocity upon joining CalPERS
All members who don't fall into the definitions above are considered classic members. Classic members will retain the existing benefit enrollment levels for future service with the same employer.
Below are some of the key subject areas affected by PEPRA.
ARP, a retirement savings program that certain state employees were automatically enrolled in for two years from their initial hire date, was eliminated. All new CalPERS members enrolled after June 30, 2013 are not affected, as enrollment in ARP has ended. State employees enrolled in ARP can convert their ARP service credit to CalPERS service credit. Visit Service Credit to learn about your options.
AB 1222 (Chapter 527, Statutes 2013) became law on October 4, 2013. This bill exempted California transit employees of public employers, whose interests are protected under Section 13(c) of the Federal Transit Act, from the PEPRA retirement benefit formula until January 1, 2015 or a court decision. AB 1222 was later extended until January 1, 2016 or a court decision.
The AB 1222 PEPRA exemption only applies to transit employees who became new members on or after January 1, 2013, and whose interests are protected under Section 13(c) of the Federal Transit Act, regardless of whether they are union or non-represented employees. These new members were eligible to receive their employer's pre-PEPRA level of benefit(s) existing on December 31, 2012. The AB 1222 PEPRA exemption applies to all eligible transit employees in the service area of the federally funded project. The process for handling incorrect membership classifications is the same for all transit employees, regardless of their status.
Due to the court decision State of California v. United States Department of Labor, if a transit employee first became a member of CalPERS or any public retirement system on or after January 1, 2013 to December 29, 2014, they will now be subject to the PEPRA retirement benefit formula effective December 30, 2014. This court decision ended the AB 1222 PEPRA exemption. However, all service credit earned during the time frame between January 1, 2013 and December 29, 2014, will remain in the classic retirement benefit formula. Service credit purchase deductions will not be impacted.
For additional information on AB 1222 refer to Circular Letter 200-075-13 (PDF).
If a public employer continued to maintain a defined contribution plan after December 31, 2012, new members may participate in a defined contribution plan that was in place prior to January 1, 2013. If a public employer adopts a new defined contribution plan on or after January 1, 2013, the new plan must conform to the requirements of PEPRA.
A public employer may provide contributions to a defined contribution plan for compensation above the pensionable compensation limit in 7522.02(c) when combined with the employer's contributions for compensation up to the pensionable compensation limit. These combined contributions may not exceed the employer's contribution (expressed as a percentage of pay) required to fund retirement benefits on compensation up to the pensionable compensation limit.
A defined contribution plan must meet the requirements and applicable limits under federal law. Internal Revenue Code section 401(a)(17) limits compensation that may be taken into account for retirement plan contributions. For 2015, the maximum compensation that may be counted for retirement plan contributions is $265,000. This limit is indexed and may change from year to year.
For public agencies, school employers, California State Universities, and the judicial branch; a new member's initial contribution rate will be at least 50 percent of the total normal cost rate for their defined benefit plan or "the current contribution rate of similarly situated employees, whichever is greater," except where it would cause an existing Memorandum of Understanding (MOU) to be impaired.
Any current or future public official or employee convicted of a felony while carrying out his or her official duties, in seeking an elected office or appointment, and/or in connection with obtaining salary or pension benefits, will be required to forfeit any pension or related benefit earned from the date of the commission of the felony.
The retiree health vesting equity requirement in PEPRA doesn't require vesting schedules that existed prior to January 1, 2013, to be changed for employees who had a contractual agreement with an employer prior to January 1, 2013.
In addition to the current calculation options of the IDR benefit for a member, this provision adds a calculation for a safety member who qualifies for an IDR that may result in a higher benefit than 50 percent of salary. An actuarial reduced retirement formula, as determined by the actuary for each quarter year of service age less than 50, will be used to determine if the IDR benefit is greater for the safety member who qualifies for IDR. These provisions remain in effect only until January 1, 2023. After that date, the new IDR provisions will not apply unless the date is extended by statute.
Learn more by visiting Service & Disability Retirement.
Pensionable compensation refers to employee pay that is factored into the calculation of the pension benefits for new members under PEPRA when they retire.
PEPRA defines pensionable compensation as "the normal monthly rate of pay or base pay of the member paid in cash to similarly situated members of the same group or class of employment for services rendered on a full-time basis during normal working hours, pursuant to publicly available pay schedules."
Thirteen types of pay that can't be counted toward pensionable compensation include:
- Any one-time or ad hoc payments
- Housing or transportation reimbursements
- Overtime allowances
- Temporary Upgrade Pay
- Uniform allowances
- Unused Vacation time
Report all pensionable compensation in accordance with Circular Letter 200-064-17 (PDF).
In addition, for the 2020 calendar year, there is a cap on pensionable compensation of $126,291 for members who participate in Social Security and $151,549 for members who don't. Both limits are subject to increases in the Consumer Price Index.
For PEPRA members (enrolled on or after January 1, 2013), we require employers to provide the Reciprocal Self-Certification Form (PDF). This is used to correctly determine the member’s retirement benefit enrollment level.
Note: This form doesn’t establish reciprocity, nor is it a request to establish reciprocity. To find out how to submit a request to establish reciprocity, visit our Reciprocity webpage.
Reciprocal Self-Certification Form Guidelines
- You’re required to provide information on your reciprocal membership in a defined benefit plan under qualifying public retirement systems.
- A list of qualifying public retirement systems is included in the form.
- You must complete a new form for each new enrollment under CalPERS.
- For guidance, navigate to the Instructions for Completing the Reciprocal Self-Certification section below.
For form information and instructions, refer to the Reciprocal Self-Certification section in the appropriate reference guide:
If you’re a member of a reciprocal system’s defined benefit plan, and are subject to reciprocity upon entry in CalPERS:
- Your reciprocal membership may qualify you for the classic enrollment level if you meet certain provisions as set forth by the law.
- Your reciprocal membership doesn’t change your CalPERS membership entry date and can’t be used to determine your formula.
- Reciprocity doesn’t allow you to keep the previous reciprocal system’s formula.
If you started working for a CalPERS-covered employer on or after January 1, 2013, and you qualify for the classic enrollment level because of reciprocal membership, the formula that was in effect on December 31, 2012 (before PEPRA was implemented) will apply to you.
- These eligible classic formulas may differ depending on the agency’s CalPERS contract and the Public Employees’ Retirement Law.
- Many agencies have multiple classic formulas based upon the provisions of the law and amendments to the agency’s CalPERS contract.
- Only members who entered membership with those agencies before the law changed or contract amendment became effective would be eligible for those prior formulas.
For questions regarding formulas, contact your human resources department, or CalPERS directly at 888 CalPERS (or 888-225-7377).
Section 1: Member Information
- Complete the required fields with your name, date of birth, CalPERS ID, and enrollment date for the employer who provided you the form.
- Select yes if you are a current member of CalPERS who has funds on deposit. Select no if you have never been a CalPERS member or terminated your membership by previously refunding your CalPERS contributions.
- Select yes if you have been a member in a defined benefit plan of any of the qualifying reciprocal retirement systems listed on the List of Qualifying Reciprocal Retirement Systems in California document enclosed with the form, and then continue to Section 2. If you don’t have membership under any of the reciprocal retirement systems listed, select no, and skip to Section 3.
Section 2: Qualifying Reciprocal Membership Information
The data in this section must be verified with the reciprocal retirement system prior to completion of the form. Failure to provide accurate membership information may result in enrollment errors and corrections.
No CalPERS-covered employment or membership information should be included in Section 2 of this form.
Full name of most recent reciprocal retirement system: List the full name of the qualifying reciprocal retirement systems you are or were a member of, that you most recently left (don’t use acronyms).
- Reference the List of Qualifying Reciprocal Retirement Systems in California (only systems named on this list should be provided on the Reciprocal Self-Certification Form).
Membership date in most recent reciprocal system: List your membership date from your most recent reciprocal retirement system.
- You must provide a full date, including month, day, and year, of the system you list in the prior bullet.
- If you’re unsure of your membership date, contact the qualifying public retirement system to confirm information prior to completing the form.
Are you currently active with this reciprocal system?
- If you’re active, select yes, then move on to the next question.
- If you’re not currently active, select no, then provide the separation date or last activity date if this membership was under the California State Teachers’ Retirement System (CalSTRS).
- If you’ve separated from the reciprocal retirement system, you must provide a full date including month, day, and year.
Did you receive a refund from this reciprocal system?
- If you didn’t refund from the reciprocal system, select no, then move on to the next question.
- If you did refund, select yes, then provide the date you refunded from the reciprocal system.
- Refunded means you have terminated your membership in the reciprocal retirement system by withdrawing your contributions.
- If you’ve refunded from the reciprocal retirement system, you must provide a full refund date including month, day, and year.
Did you retire from this reciprocal system?
- If you didn’t retire from the reciprocal system, select no, then move on to Section 3.
- If you did retire, select yes, then provide the date you retired from the reciprocal system.
- Retired means you have separated from the reciprocal retirement system and are receiving a monthly retirement allowance.
- If you have retired from the reciprocal retirement system, you must provide a full retirement date including month, day, and year.
- Add information for any additional reciprocal retirement systems you have membership in. Attach additional forms as needed.
Section 3: Sign and Certify
- Once you’re finished filling out the form, ensure the information you provided is accurate and the form is complete. Submitting inaccurate information affects how your retirement benefit is calculated and may lead to future financial obligations for you and your employer.
- Read the statement, then sign your name, and date the document before returning it to your employer’s personnel office
- To submit a request to establish reciprocity:
- Log in to your myCalPERS account
- Select Retirement, then Retirement Summary
- Under the Reciprocity section of your retirement summary, select submit a request to establish reciprocity
- The Reciprocal Self-Certification Form (PDF) must be completed even if you don’t establish or are ineligible for reciprocity.
Public employers are prohibited from granting retroactive pension benefit enhancements that would apply to service performed prior to the operative date of the enhancement. An increase to a retiree's annual cost-of-living adjustment within existing statutory limits is not considered to be an enhancement to a retirement benefit.
For retirees interested in working for a public employer in the same retirement system from which they retired (without reinstatement from retirement), PEPRA has certain requirements that need to be met. These requirements include, but are not limited to:
- A 180-day waiting period is required for all employees who retire from a public employer before a retiree can return to work within the same retirement system without reinstating from retirement, unless a specified exception applies. This 180-day wait period begins on the date of retirement.
- All retirees are prohibited from working more than 960 hours per calendar or fiscal year, depending upon the retirement system. For CalPERS, it is per fiscal year.
- A person retired from a public retirement system other than CalPERS who is appointed to a full-time position on a state board or commission will be required to suspend his or her retirement allowance and become an active member of CalPERS, unless the appointment is non-salaried.
Learn more about Working After Retirement.
Laws, Legislation & Regulations
Forms & Publications
- Member Reciprocal Self-Certification (PERS-EAMD-801) (PDF)
- Public Agency & Schools Reference Guide (PDF, 6.3 MB)
- State Reference Guide (PDF, 2.43 MB)
- Welcome to CalPERS: A Benefits Guide for Public Agency Members (PUB 5)
- Welcome to CalPERS: A Benefits Guide for School Members (PUB 3)
- Welcome to CalPERS: A Benefits Guide for State Members (PUB 4)
- When You Change Retirement Systems (PUB 16) (PDF)