In no way, shape, or form is this information all-inclusive and it is for reference only. I am not an expert in any of this.
I am sharing some of the things I have learned as I prepare to venture off into retirement. I have tried to pay attention through the years as other members have retired. The information they gain is somehow not
passed on to current employees because the knowledge goes out the door with them.
One quick ballpark estimator for annual retirement income is to use this calc.:
94.5 x q-day x PERs percent (.9) = annual $
During a raise cycle you will need to complete 12 months at the Q-day rate you are using for the calculation or your estimate will be off.
PERs annual accrual.
If you were to ask most PERs members how long it takes to earn 1 year of service credit in the PERs system, the answer would likely be 10 out of 12 months. That is partially true. During an online PERs class, it was explained that there are actually three ways to earn a year of service credit in the PERs system.
The three methods are:
10 out of 12 months full-time.
In Operations, we work a 56-hour schedule which means we accrue time more quickly than most other PERs members. Here is how that breaks down:
1720 hours on a 56-hour schedule
1720/56= 30.71 weeks
.59×12= 7.08 months
.1412 service credits per month
It takes a firefighter on a 56-hour schedule 7.08 months of a fiscal year to accrue 1 year of service credit with PERs. That firefighter will earn .1412 service credits per month starting July 1st until 1.00 service credit is attained (7.08 x .1412 = .99969) which is around Feb.
PERs service time is calculated on a fiscal year from July 1st to June 30th each year. I will detail my dates as an example.
Hire Date 3/01/1993 so for 1993 I was actually in the 92/93 fiscal year and earned time for March, April, May, and June of that year. 4 months at .1412 equals .5648 years of service credit.
Every July 1 st my PERs accrual will land on the decimal .5648 plus the number of complete years. Over the next 7.08 months, July to January (plus a couple of days in Feb.) I will accrue .1412 for each month (.1412 x 7.08 = .999696) totaling 1 year of service. When I look on the PERs website my time accrual will hold that number until July 1 st when it will again start to add on. To determine your earliest retirement date at full retirement use the
calculator on the PERs website. You will need to play with dates and check the details, which will give you a breakdown of many factors including years of service on that date.
The numbers in my example above also work into the next Fiscal year. If I sit at 29.5648 on July 1 st I will need .4352 to complete a year. Therefore, .4352/.1412 = 3.08 months. July, August, and September. At which point the end of September or early October my annual accrual will be a whole number. 30.000 which at 3% per year gives 90%.
Your City time only affects your retirement in areas around pay raises and “Service Awards” at every 5-year mark.
If you took a medical (or other) “leave” from the City, your City time would be put on hold, but it is likely only your City time that will be affected as PERs calculates differently as listed above. I have heard some members get wrapped up in City time vs. PERs time. They affect different factors of your retirement date. Your City time will affect your raises for things like longevity and step raises. Your PERs time is the one that matters in regards to your retirement percentage. PERs is the one who will be paying you in retirement so if they say you have the time go with their numbers.
“Highest Year” in regards to the PERs calculation for your retirement pay is based on the highest 12 consecutive months of pay (excluding overtime). This may not be your last year. A few years back we had a Captain who
worked in a 40-hour spot and then returned to the floor. After a few years on the floor, his 40-hour year was still his highest year in which case his retirement was based on the highest year and not his last year. In most cases, however, it will be your final 12 months. Even though you earn service credit in 7.08 months your pay is
based upon a full 12 months. Where does this affect most of us? Say you want to retire at around 24 years of service. According to our contract, we get a 7.5% longevity step starting the 1st day of our 25th year (24 years and 1 day). To capture all of that raise, you need to stay and earn that money for a full year. The same is true for
any raise. If you retired 6 months into your 25th year you would get roughly 50% of that raise, or averaged, 3.75% of the previous year’s pay in retirement. PEPPRA members’ retirement will be based on the highest 36 months.
Retirement – Sick/Vac Cash Out:
According to our MOU, we are entitled to “time earned as if used”. What in the world does that mean? It means that upon retirement, the City has to pay us the additional hours we would have earned if we actually took the time off. The formula is also in the MOU. After 12 years of service, a member earns 11.08 hours of vacation
and 4.15 hours of sick for each 2-week period (112 hours) for a total of 15.23 hours of accrual.
This item is currently being disputed by the City even though it is very clear in the contract. They have not been paying our retirees this money at separation for many years. Here is an example of what this means
If a member retired with 800 hours of sick time and 500 hours of vacation time they would have a total of 1300 hours plus “time earned as if used”.
1300 hrs/112 = 11.607 days “worked”
11.607 x 15.23 hrs = 176.77 additional hours owed
176.77 x composite hourly rate = $
176.77 x $51.23 = $9055.93
1300 hours = $66,599
1476.77 hours = $75,654.93 (inclusive of time earned as if used)
The above cashout of sick and vacation time is bound by the TFFA MOU to go into
the PORAC RMT.
RMT (PORAC Retiree Medical Trust):
Every month you buy 4 ASUs (Active Service Units) and the City buys one for a total of 5 ASUs per month. Our cost for each ASU while working is $50 ($200 per month). Upon retirement and according to the TFFA MOU Appendix D we are required to place all cash out of sick and vacation into the RMT. This cash out is calculated by the city and deposited into your “personal” account with the RMT. The RMT gives you the option to buy more ASUs and place some or all of your cash out into the pooled account. The rate will be much higher than the $50 per ASU. It will be closer to $100 per ASU and maybe more. The withdrawal from the pooled account will not be available until age 55 regardless of age at retirement. You do have the option to draw from your personal account upon retirement even before age 55. The personal account will draw down in value with each withdrawal, unlike
the pooled account which is a fixed benefit. Upon death, 50% of the pooled account fixed benefit will be paid to your spouse until their death. The Simon365 website has tools to estimate your monthly payout from the pooled account as well as the cost of ASUs with the deposit of cash-out money based on your anticipated retirement date. The PORAC RMT is considered triple tax-free. It is pre-tax money going in, it earns interest that is not taxed and it is not taxed on disbursement as it can only be used for medical expenses (which includes medical plan monthly premium payments)
My plan, as I will retire at 52 ½ years old, is to place enough money in my personal account to help me bridge the 30 months I have until age 55 when I can get the pooled disbursement. If I place $27,000 into that account, I can take $900 per month for 30 months and zero out that account when I reach 55. I will take the remainder of the cashout at separation and buy additional ASUs in the pooled plan, which should give me a lifetime disbursement of around $925 per month.
The Benevolent Fund is a Union controlled and self-funded long-term disability insurance program for our membership. We contribute to it monthly through payroll deduction. If you go through your career and never take a disbursement from the fund you will be given a check for ALL of your contributions. If you took a disbursement that was less than the sum of your contributions you will receive a check for the balance. If you took disbursements that total more than your contributions you will not get a check, but you do not owe the difference either. According to the Union, you must request this money as it will not automatically be paid out upon retirement.
For City things:
If you are planning to retire before December of a given year, you can stretch your last day to the 1st shift of the next month. Doing this will get the City to pay their medical contribution for that month. However, If you tried this at the end of December (rolling into January) it would have negative repercussions on your PERs
There are a lot of factors that go into a retirement date with PERs. Some of those factors are; your age, how many years of service do you have with PERs, what is your retirement factor (3% @50, 2.7 @57 etc.), are you currently in a raise cycle? In which case you need to earn 1 complete year at the new rate to take it all into retirement. Another factor is the end of a calendar year. If you will reach your 90% in the first few months of a new calendar year, it may be beneficial to go in December of the previous year. For example, if you retire in December with 89% you will get credit with PERs for being retired for all of that given year. You will then have to be retired for one more calendar year for your Cost Of Living Adjustment to take place (usually around May).
Example based on 3% COLA through PERs:
December 2023 = 89%
May 2025 = 92% (first eligible COLA)
May 2026 = 95%
If you waited to get the full 90% and stayed until January 2024
January-December 2024 = 90%
May 2026 = 93% (first eligible COLA)
As you can see by the above description, you may never catch up by staying to get a full 90% if you are close at year’s end.
If you have time with another agency that was in the PERs system but used a different formula for you at the time (3% @55, 2% @50, etc.) you can stack that on top of your 90% or you can leave earlier and have that make up some of your income if you don’t get to 90%. PEPRA employees are not limited to 90%. They are limited by a stated maximum income which is adjusted each year.
When you reach age 50 (earliest retirement possible through PERs) you will have 3% times every year of service credit you have with PERs under that formula.
When you reach age 52 (earliest retirement possible through PERs) you will have 2.2% times every year of service credits you have with PERs under that formula.
53 – 2.3%
54 – 2.4%
55 – 2.5%
56 – 2.6%
57 – 2.7% is your maximum factor, so every additional year is 2.7%
There are other formulas in PERs, but these are the two that affect TFFA members
Cost of living adjustments is made to PERs income based on the Consumer Price Index and your City’s negotiated rate. The cola is looked at each year during the first quarter and it is assessing the previous year’s increase in CPI. You must be retired for 2 years before your first COLA.
If you retire in December of 2023 you get credit for 2023. You will be retired all of 2024 and in the 1st quarter of 2025, PERs will evaluate your COLA. If you retire in January of 2024 you will need to be retired all of 2024 and all of 2025. In the 1st quarter of 2026, PERs will evaluate your COLA. The calculation for COLA will make your head hurt as there are several factors that affect it including current CPI, negotiated %, and the Index of the year you retired.
PERs survivor benefit:
We pay each month for PERs survivor benefit. It is a deduction on your paycheck but it is a benefit that most don’t understand is included. Even a PERs representative was confused when evaluating one of our recent retirees as they went through the process. The survivor benefit means that you can take the “Unmodified” amount and your survivor will get 50% of that upon your death. Again on the MyCalPERs website, you can get a retirement estimate. To prove this point you can get an estimate with no survivor and no beneficiary selected. Note the “Unmodified” amount (you will see your survivor gets zero). Now modify that estimate to include a survivor and a beneficiary. You will see the “Unmodified” number stays the same and now your survivor will receive ½ of your unmodified monthly retirement until their death. There is a specific definition on the PERs website outlining exactly what
a “Survivor” is. Classic and PEPRA employees are contributing to this.
Consult PERs on the specifics of the Beneficiary payouts. You can include a beneficiary on your estimate to see what it costs for the different levels of payout. 50% or 100% beneficiary. A common theme for our past members has been to go with the “unmodified” amount and get a life insurance plan for the primary member. This typically costs less than the PERs options. You need to sit down with your Spouse and possibly your financial advisor to determine the best course of action for you and your family.
Go to live or online PERs classes when they are offered
Read your MOU. Know what it says and how your benefits work. We have had members retiring for years and not getting the proper payout because they didn’t pay attention to the MOU and hold the City accountable.
MyCalPERs.com is a fantastic tool with loads of information. The estimate for retirement on the dashboard is pretty close.
Vimley – Simon365.com is the website for the PORAC RMT and is also a good site for information and estimates of your potential payouts.
Empower – https://torrance457.empower-retirement.com/participant/#/login?accu=TorranceWR
This is the login for the City’s 457 Deferred Compensation Plan.
You can drop the mic and walk out the door, but planning is your friend. You need to give PERs and the city some time to ensure you are prepared. This will allow all of the paperwork to process through both the City and PERs to limit any delay in getting your payment to you after retirement. PERs says at 1 year … 6 months … and
at 3 months … The City says at 2 months … It is also in good taste to give the Fire Chief notification about a month out (if not more).
BCN: I have no experience with BCN
There are probably a million other things I have not written down and I hope to add to this sheet when I learn something new. Please ask questions and have a desire to know about your paychecks, your retirement, and your contract as all of those things are for your benefit. Ask me, ask another retired person, or ask PERs. No matter
what it is if you have a question seek it out and find the answer. Hopefully, this will assist someone else by giving them a tidbit of information or lowering their anxiety about retirement. Almost everyone I have talked to who is now retired from TFD says “don’t wait” or “I should have done it sooner”. We all have our own lives and
struggles so only you will know what time is actually right for you to retire.