If you were hired on or after January 1, 2013, it’s likely the Public Employees’ Pension Reform Act (PEPRA) is applicable to you. Right now, employees who fall under PEPRA make up around 54% of CalPERS active members from California state, schools, and public agencies.
PEPRA changed the way CalPERS retirement benefits are administered and when members are eligible to retire.
You may fall under the category of a PEPRA member if:
- You’re 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 (CSU), 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.
- You’re a new hire who joined CalPERS for the first time on or after January 1, 2013, and you have no prior membership in another California public retirement system.
- You’re a new hire who joined CalPERS for the first time on or after January 1, 2013, and you were a member of another California public retirement system prior to that date, but you were not subject to reciprocity upon joining CalPERS.
If none of the above categories apply to you, you’re considered a classic member, and the existing benefit enrollment levels for future service with the same employer will be applicable to you.
PEPRA members are required to contribute at least 50% of the total annual normal cost of their pension benefit. The normal cost is the amount to fund your annual pension benefits for the upcoming fiscal year. When the normal cost changes by more than 1% of payroll, the member contribution rate is adjusted. Rates can decrease, stay the same, or increase in any given year.
However, state employees are excluded from this requirement except for employees of the Legislature, California State Universities (CSU), and the judicial branch.
Pensionable compensation refers to employee pay that is factored into the calculation of the pension benefits for PEPRA members. The caps don’t have anything to do with how much your employer can pay you. They are a cap on the total pension amount a member can earn a year. PEPRA and classic members have differing caps. It’s defined as special compensation for classic members.
For the 2023 calendar year, the PEPRA cap is $146,042 for members who participate in Social Security and $175,250 for members who don’t. Both limits are subject to increases in the Consumer Price Index.
On the other hand, classic members’ 2023 cap is $330,000. (Note: Members whose service began prior to July 1, 1996, have no cap.)
Want to Learn More?
This is an abbreviated list of the most significant differences between classic and PEPRA memberships. For more in-depth information, visit the Public Employees’ Pension Reform Act page on our website.
If you’d like to learn more about your benefits, visit our YouTube channel or consider attending a CalPERS Benefits Education Event in the future. More learning opportunities can be found on our Member Education webpage. If you’d like to speak to one of our experts, feel free to make an appointment or call us at 888 CalPERS (or 888-225-7377).