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 ACERA, 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. 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 Form.

Should I retire, refund, or defer my retirement?

When you leave ACERA-covered employment, you have to decide what to do with your retirement account. While some members are ready to retire or take a refund immediately, others choose to defer. Deferring means leaving your money with ACERA to maintain your membership—either because you aren’t eligible to retire yet, you haven’t decided your next move, or you’re establishing reciprocity with another agency. For a complete overview of all your options, you can visit our Leaving Employment page. To help you decide which path is right for you, here are the primary reasons to consider deferring your retirement, as well as reasons why you may want to avoid it.

Reasons You May Want to Defer Your Retirement

1. You aren’t yet eligible to retire. If you leave employment with your ACERA Participating Employer before reaching retirement age, you can enter deferred status while you wait to become eligible.
   • If you have 5+ years of service: Tiers 1, 2, and 3 become eligible at age 50. Tier 4 members are eligible at age 52 (General) or age 50 (Safety).
   • If you have less than 5 years of service: You must wait until age 70 to begin receiving your retirement allowance.
2. 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. You must defer your ACERA membership and leave your employee contributions on deposit in order to establish reciprocity with the next agency where you become employed.
3. You haven’t decided what to do yet. If your job is terminating, and you’re not yet sure whether you want to take a refund of your retirement contributions, retire (if eligible), 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. Keep in mind that you need to start your new job with a reciprocal agency within 6 months of leaving your ACERA-covered job to establish reciprocity.

Reasons You Probably Don’t Want to Defer Your Retirement

1. 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. We recommend running estimates of both retirement scenarios using the benefit estimator in your online ACERA account, and we think you’ll find that the increased retirement allowance later won’t make up for the retirement payments you’re missing now.
2. You’re eligible to retire, and you plan on returning to ACERA service later to increase your benefit. Deferring isn’t your only option. If you retire now, you get the benefit of immediate monthly income. If you eventually return to work for an ACERA-participating employer, you can suspend your retirement and start earning service credit again. In most cases, collecting your retirement now and suspending it later is more financially advantageous than leaving that money on the table while you wait to return to work. See our Working After Retirement page for more details.

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 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.

Returning to Work at an ACERA Employer From Deferred Status

A deferred member may return to work for an ACERA Participating Employer and earn additional retirement service credit only if they are rehired into a position that is eligible for ACERA membership. If the position qualifies for ACERA participation and the individual meets the membership requirements, they will return to active membership and begin earning service credit again based on the hours worked in that eligible position.

However, if the member returns in a part-time position that is not eligible for ACERA membership—e.g., Service-as-Needed, Part Time, Temporary Assignment Pool (TAP), Project, Temporary—they would remain a deferred member and would not earn additional retirement service credit during that employment. If at a later date the member is hired into a retirement-eligible position, they may purchase the ineligible time as service credit. 

Retiring as a Deferred Member

If you become eligible to retire while a deferred member, you may do so.

Vested Members

Vested members (members who have at least 5 years of service credit) who elect deferred membership will become eligible to receive a retirement allowance when they reach the minimum age according to our eligibility requirements for retirement.

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—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. 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. Review our Preparing to Retire section to fully prepare for retirement. 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

Non-vested members (members who have less than 5 years of service credit) who elect to defer membership have the following options for becoming eligible to retire from ACERA:

• Attain age 70. Non-vested, deferred general and safety members age 70 or over are eligible for a retirement benefit.
• Re-enter into active membership with ACERA. Non-vested, deferred members who are re-employed with an ACERA Participating Employer in an ACERA-covered position will re-enter active membership and can become vested by attaining a total of 5 years of service credit. You may apply for a retirement benefit upon meeting eligibility requirements.
• Establish employment with a reciprocal agency. Non-vested, deferred members who establish a reciprocity and become vested earning 5 years of credited service between multiple linked retirement systems may apply for a retirement benefit upon meeting eligibility requirements.
• Purchase 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.

How to Defer Your Retirement (Become a Deferred Member)

1. Download and complete the Termination Election Form.
2. Elect to defer your membership by checking Box 1 in Section 3.
3. Follow the instructions at the end of the form to submit the form. Make sure to submit your form to ACERA within 90 days of your termination date.

Termination Election Form