On December 10, 2009, the Governor signed into law pension reform legislation (Assembly Bill No. A40026 and Senate Bill No. S66026) that creates a new Tier 5 that, in accordance with constitutional requirements, only applies to new members of PFRS who first join on or after January 9, 2010.
Some of the significant changes impacting Tier 5 members include, but are not limited to:
- Employee contributions of 3% of pay for all years of creditable service
- Ten year credited service vesting requirement
- While ALL overtime compensation should continue to be reported, overtime compensation will be limited for final average salary calculations to 15% of non-overtime annual wages by calendar year effective in 2010.
Overtime compensation as defined in the legislation is “compensation paid under any law or policy under which employees are paid at a rate greater than their standard rate for additional hours worked beyond those required.