2. Deferring Your Retirement
If your active employment terminates, you will no longer be considered an “active” ACERA member. If you don’t immediately retire, you become a “deferred” member, which means that you continue to be a member of the retirement system, but you’re going to defer your retirement to a later date.
When you defer membership, your payment of employee contributions ends and you elect to leave your accumulated employee contributions and interest on deposit with ACERA. In addition, you no longer earn service credit under the plan. Your contributions on deposit with ACERA continue to earn interest, and you can request a refund of your contributions at any time, unless you have established reciprocity with another public agency. Also, if you defer membership and subsequently return to ACERA-covered employment, you will return at your original entry age and tier.
If you are terminating employment, you may elect to defer membership on the ACERA Termination Election of membership Form.
Should I retire or defer my retirement?
If you’re leaving work, and you’re considering whether you should retire or defer your retirement to a later date, here is a list of reasons you may want to consider to deferring your retirement.
Reasons You May Want to Defer Your Retirement
- You’re done working here, but you’re not yet eligible to retire. You can be in deferred status while you await retirement eligibility.
- You’re going to work for another California public agency. In this case, you can establish reciprocity and take advantage of linking the retirement systems together. More on this below.
- You might want to return to work for your employer or another ACERA employer to earn more service credit. If you retire, you can’t return to work and earn more credit toward retirement. But if you defer your retirement and come back later, you’ll start earning service credit again from where you left off.
- You haven’t decided what to do yet. If your job terminating, and you’re not yet sure whether you want to retire or try to get another job with a reciprocal agency and establish reciprocity or even pursue another job with one of ACERA’s participating employers, you can defer your decision to retire and become a deferred member of ACERA.
Reasons You Probably Should Not Defer Your Retirement
- You’re already eligible to retire, but you’re waiting for your age factor percentage to increase. If you’re already eligible to retire, and none of the reasons in the previous list apply to you, it’s probably to your advantage to go ahead and retire. Yes, if you defer your retirement and wait for your age factor percentage to increase while you get older (the percentage of your highest working salary you’ll get for each year of service), your retirement allowance will increase due to the age factor percentage increase. However, while you’re waiting, you’re missing out on monthly retirement payments you could be receiving. If you run estimates of both retirement scenarios using the benefit estimator in your online ACERA account, we think you’ll find that the increased retirement allowance later won’t make up for the retirement payments you’re missing now.
Additional Things to Consider Before You Defer Your Retirement
There are No Continuance Death Benefits available to Beneficiaries of Members Who Die in Deferred Status
If your death occurs while you are in a deferred member status with ACERA (you are no longer working as an active ACERA member but are not yet retired), your beneficiary(ies) will be receive a return of your retirement contributions plus interest as of the date of death. No additional death benefits, including a continuance or lifetime continuance, are offered to your beneficiaries.
For example, if you were to terminate your employment and enter deferred status, submit a retirement application, and die before your retirement date, ACERA would not pay a continuance to your beneficiary, because you died neither as an active member or a retired member.
Learn more on ACERA’s Death Benefits page.
Deferred Members Loose All of Their Accrued Sick Leave
If you go straight from active pay status into retirement, ACERA will convert your unused sick leave into service credit on a 2-to-1 basis, as allowed by your bargaining unit. However, if you become a deferred member by terminating your employment prior to retiring, you lose all of your accrued sick leave. You can find more information about the rules around conversion of sick leave to service credit here.
Retiring as a Deferred Member
If you become eligible to retire while a deferred member, you may do so. The retirement allowance benefits available to you through deferred membership vary, based on tier and vesting status, as follows:
Vested members who elect deferred membership become eligible to receive a retirement benefit allowance when they would have become eligible to retire had they remained in county service. Review our Eligibility for Retirement page for the requirements.
For both general and safety members, your benefit is effective on your retirement date. Your service credit will be calculated as of your deferred membership date and you will not earn service credit during deferred membership; however, your age factor percentage will increase up to a certain age determined by your tier and membership status. Once you reach the maximum age factor percentage for your tier, you will not benefit by remaining a deferred member unless you continue to work for a reciprocal agency and are receiving salary increases.
You must apply to retire by filing a service retirement application. Retirement applications must be received no earlier than 90 days before the effective date of retirement and no later than the effective date of retirement.
Non-vested members who elect to defer membership are usually only eligible to receive a lump sum payment of employee contributions and interest on deposit with ACERA. However, there are certain circumstances that could allow you to become eligible for a retirement benefit allowance, as follows:
- Attaining age 70. Non-vested, deferred general and safety members age 70 or over are eligible for a retirement benefit.
- Your re-entry into membership with ACERA. Non-vested, deferred members who become re-employed with a participating employer, re-enter the ACERA system, and become vested by attaining five (5) years of credited service, may apply for a retirement benefit upon meeting eligibility requirements.
- Your employment with a reciprocal agency. Non-vested, deferred members who establish a reciprocal agreement and become vested earning five (5) years of credited service between both retirement systems may apply for a retirement benefit upon meeting eligibility requirements
- Your purchase of eligible service credit. Non-vested, deferred members whose eligible service credit purchase results in more than five years of service (combined with current membership) become vested and may apply for a retirement benefit upon meeting eligibility requirements.
Enrolling in Healthcare Coverage From Deferred Retirement
Retiring from deferred status is considered a Status Change Event (a.k.a. Qualifying Event), which means you have a period of 30 days after your retirement date to enroll in healthcare coverage in ACERA’s healthcare plans if you choose. Because of the nature of deferred retirement, your coverage in most cases will become effective on the first of the month two months after your retirement date. So if your retirement date is in June, for example, your healthcare coverage would become effective August 1.
The monthly retirement allowance you receive from ACERA must be large enough to cover the premium costs for the group plan benefits you wish to elect or you cannot newly enroll in our group plans. (This includes your dependents; if your allowance is only sufficient for you to enroll yourself and not your dependents, you cannot enroll your dependents.) Alternatively, you may be able to enroll in an individual plan through Via Benefits. Refer to our page Who Can Enroll in Healthcare Plans? for more information on eligibility to enroll in ACERA’s healthcare plans.