Safety Plan C members are subject to an annual compensation limit for calculating retirement benefits under Section 7522.10 of the California Public Employees’ Pension Reform Act of 2013 (PEPRA).
The compensation limit is adjusted annually, based on the changes to the Consumer Price Index for All Urban Consumers: U.S. City Average. Each fall, the California Actuarial Advisory Panel (CAAP) publishes an advisory letter providing the PEPRA compensation limit that will apply for the following calendar year effective January 1.
If You Reach the Cap
In the event that a Safety Plan C member’s annual earnings reach the maximum amount permitted that year under Section 7522.10 as calculated by CAAP, LACERA will discontinue deducting retirement contributions from that individual for the remainder of the year. Deductions for contributions will resume the following January. The member will still receive service credit if they continue to earn enough compensation such that a contribution would have been made if not for the compensation limit.
Final Compensation Calculation
Final compensation is one of the factors (along with retirement plan, age at retirement, and amount of service credit) that is used to calculate a member’s retirement allowance. In compliance with PEPRA, for purposes of retirement calculations, the amount of annual final compensation is limited to the amount set forth under Section 7522.10.