Prior to the California Public Employees’ Pension Reform Act of 2013 (PEPRA), members with at least five years of County service credit could purchase up to five years of additional retirement credit (ARC). ARC could be purchased to increase total service credit and was not based on actual employment. New ARC purchases were prohibited as of January 1, 2013.
If You Have Already Purchased ARC
ARC purchased under any of the following conditions remains valid and was not affected by PEPRA:
- Purchases made prior to 2013
- Purchases resulting from ARC applications received by LACERA by December 31, 2012, regardless of the actual purchase date
- ARC contracts in effect prior to 2013
Benefits of ARC
When you retire, your retirement allowance will be calculated based on three factors: the amount of service credit you have accumulated, your age at retirement, and your final compensation.
ARC adds years to your service credit total for the sole purpose of calculating your retirement. By increasing the amount of service credit you have accumulated, ARC increases the amount of the monthly allowance you will be eligible to receive when you retire.
Limitations Of ARC
ARC does not count toward your retirement eligibility, vesting, 30-year cancellation of contributions, retiree healthcare subsidy, or other benefits based on total years of service credit.
If you have an existing ARC contract, only contracts based on payments made exclusively with after-tax dollars may be revised or revoked. Contracts that include payroll deductions and/or payments using other before-tax funds are irrevocable. Following are some additional scenarios if your contract is still open.
- If you revoke your after-tax dollar contract before it is paid in full, LACERA will prorate the amount you have paid and credit your account for years/months of ARC accordingly. LACERA cannot refund the money you already paid until you terminate County service; if you die, the money will be paid to your beneficiary.
- If you retire or terminate County service and defer your retirement (leave your contributions on deposit with LACERA) before your contract is paid in full, you may complete the contract within 120 days after your effective date of retirement or termination. If your contract is not paid in full, your retirement allowance will be prorated to include ARC for whole months already paid.
- If you are granted a disability retirement before completing your Payment Contract, your account will be credited for the years/months of ARC paid up to the date your disability retirement was granted. If you elect to complete the Payment Contract, you must do so within 120 days of the date your disability was granted.
- If you die before paying your contract in full, your eligible surviving spouse or domestic partner (or minor child) would be eligible to complete payment within 120 days after the date of death. If your contract is not paid in full, the continuing benefit will be prorated to include ARC for whole months already paid.
Plan E ARC Contracts
Additional information about ARC and ARC contracts is provided below for noncontributory Plan E members.
- Transfers: If you transfer to Plan D, your Plan E ARC will remain as Plan E service credit and you will have a double account. At retirement, you will receive a combined allowance: a Plan E retirement allowance based on your previous period of Plan E service credit (including Plan E ARC) and a Plan D retirement allowance based on your Plan D service credit (including Plan D ARC). Retirement eligibility rules apply.
- COLA: In accordance with the law, annual April 1 COLA percentage increases do not apply to Plan E ARC service credit.
- Terminating service prior to becoming vested: If you terminate County service before earning 10 years of service credit, LACERA will refund the amount you paid on your ARC contract.
- Maximum percentage of final compensation: Your Plan E portion of your retirement allowance cannot exceed 80 percent of final compensation, regardless of ARC.