California Public Employee Relations

Pocket Guide to the Public Employees'
Pension Reform Act

By Kerianne Steele
1st edition, 2013

$20 each

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The far-reaching Public Employees’ Pension Reform Act took effect on January 1, 2013. This new law radically transforms public employee pensions   and CPER’s new guide is a must for all those who advise public employees and employers.

Do you need to understand PEPRA’s complex provisions?

PEPRA applies to all state and local public retirement systems, and to their participating employers, including the Public Employees’ Retirement System (CalPERS), the State Teachers’ Retirement System (CalSTRS), the Legislators’ Retirement System, the Judges’ Retirement Systems I and II, county and district retirement systems created pursuant to the County Employees Retirement Law of 1937 (Act of ’37), independent public retirement systems, and individual retirement plans offered by public employers.

Exempt from PEPRA are the University of California Retirement Plan and charter-based retirement systems, which are not governed by state statutes.

The new CPER guide explains these important areas:

  • New members
  • New retirement formulas
  • Defined contribution plans
  • Employer and member contributions
  • Health plan vesting
  • Industrial disability retirement
  • Pensionable compensation
  • Creditable compensation
  • Retroactive benefit enhancement
  • Compensation earnable
  • Forfeiture for felony conviction
  • Legislative retirement system
  • And more

The guide includes the statutory language of the act, pertinent Government Code and Education Code sections, a glossary of terms, and an index.



I. Introduction1
II. PEPRA Coverage 2
    A. Retirement Systems That Are Included 2
    B. Retirement Systems That Are Excluded 2
III. Two Main Categories of Employees:
“New Members” and “Legacy Members”/“Classic Members”
    A. “New Members” 4
    B. “Legacy Members”/“Classic Members” 6
IV. Retirement Formula: “New Members” Only 8
    A. CalSTRS 9
    B. State Employees 9
          1. Miscellaneous and Industrial 9
          2. Safety 10
    C. CalPERS-Participating Employers, Independent Retirement Systems, and ’37 Act Systems 10
          1. Non-safety 10
          2. Safety 10
    D. Judges’ Retirement Systems I and II 11
V. Employee Contributions Toward Retirement 12
    A. CalPERS-Participating Local Agencies and School Employers 12
          1. “New members” 12
          2. “Classic members” 15
    B. State Employees 17
          1. “New members” 17
          2. “Classic members” 17
    C. CalSTRS 19
          1. “New members” 19
          2. “Classic members” 19
    D. Independent Retirement Systems 19
          1. “New members” 19
          2. “Classic members” 19
    E. ’37 Act Systems 19
          1. “New members” 19
          2. “Classic members” 19
VI. Pensionable Compensation: “New Members” Only 22
VII. Creditable Compensation: New CalSTRS Members Only 26
VIII. Caps on Pensionable Compensation:“New Members” Only 27
IX. 36-Month Final Compensation Period: “New Members” Only 29
X. Compensation Earnable: “Classic Members” of ’37 Act Systems Only 30
XI. Ban on Purchase of “Airtime”: Applies to All 33
XII. No More “Pension Holidays”: Applies to All 35
XIII. “Sit Out” Period Before Post-Retirement Employment 36
XIV. Forfeiture of Pension Benefits for Certain Felony Convictions: Applies to All 39
XV. Health Plan Vesting: Applies to All 40
XVI. Industrial Disability: Applies to All Safety Members 41
XVII. Retroactive Benefit Enhancement Applies To All 42
XVIII. Legislative Retirement System (LRS) 44
XIX. Threat to Transit District Funding 45
XX. Statutes 47
    A. The California Public Employees’ Pension Reform Act of 2013 47
    B. Other Pertinent Government Code Sections 77
    C. Pertinent Education Code Sections 86
XXI. Glossary 88
XXII. Index of Terms 90


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