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Pension Reform (AB 340) Update. General. AB 340, the Public Employees’ Pension Reform Act of 2013, was signed into law on September 12, 2012. CalSTRS “Classic Member”. An employee who was a member prior to Jan. 1, 2013.
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General AB 340, the Public Employees’ Pension Reform Act of 2013, was signed into law on September 12, 2012.
CalSTRS “Classic Member” • An employee who was a member prior to Jan. 1, 2013. • An employee who had terminated their coverage prior to Jan. 1, 2013, and returned to active membership on or after Jan. 1, 2013. • An employee performing CalSTRS creditable activities even if they were subject to coverage under a different retirement system such as CalPERS, CalSTRS Cash Balance, or Social Security.
CalSTRS “New Member”Definition • “New hires” are not necessarily “new members”. A “new member” is an employee performing CalSTRS creditable service for the first time.
CalSTRS “New Members” • Minimum retirement age: Age 55 with 5 years of service. Cannot retire prior to age 55. • Normal Retirement age is 62. • Career factor has been eliminated. • Final Compensation based on highest salary rate over three consecutive school years, regardless of years of service.
CalSTRS “New Members” • Creditable compensation islimited to $136,440 (120% of the 2013 Social Security wage limit and subject to annual adjustment). No contributions will be paid by member or employer on compensation in excess of the limit. • Only compensation regularly payable pursuant to a publicly available pay schedule will be creditable. • “Airtime” or nonqualified service purchase is not allowed. There is no impact on all other service credit purchases. • Employee contributions will remain at 8%.
CalSTRS –All Members • $0 earnings limit will be extended to all members whose retirement is on or after Jan. 1, 2013, regardless of age, for the first 180 days of the member’s most recent retirement. • The 2012-2013 earnings limit is $40,011.
CalPERS “Classic Member” • Employee who was a member prior to Jan. 1, 2013. • Employee who became a CalPERS member prior to Jan. 1, 2013, terminated and received a refund, and returns to the same employer (all schools are considered one employer). • A member who moves from one CalPERS covered employer to a different CalPERS covered employer with a break in service less than six months.
CalPERS “New Members” • A “New Member” is an individual who has never been a member of any public retirement system prior to January 1, 2013. • A member who moves from one CalPERS covered employer to a different CalPERS covered employer with a break in service greater than six months. • A part-time employee hired prior to Jan. 1, 2013, but does not become a member of CalPERS until after Jan. 1, 2013.
CalPERS “New Members” • Age factor is 2% at age 62 (currently 2% at age 55) • Minimum retirement age is 52 with 5 years of service. • Creditable compensation is $113,700 for those with Social Security and $136,440 for those without Social Security (subject to annual adjustment). • Final compensation based on highest three year average. • Employee contribution rate is 6%.
CalPERS - All Members • $0 earnings limit will be extended to all members whose retirement is on or after September 12, 2012, regardless of age, for the first 180 days of the member’s most recent retirement. • Post-retirement employment hours limit stays at 960.
