The State Worker

Higher pension contributions ahead for a few thousand California state workers

The CALPERS building in downtown Sacramento.
The CALPERS building in downtown Sacramento. The Sacramento Bee

Starting next month, state workers who are in a lower-contribution, lower-benefit California state retirement plans will have to pay more money into their pension accounts.

The increase affects nearly 6,400 “Tier 2” CalPERS members who have been paying 3 percent of their pay toward their pension benefits. The new rate as of July 1 will be 3.75 percent – still less than half the rate paid by most state workers.

An example of Tier 1 vs. Tier 2 formulas Tier 1: 2% @ age 55 Tier 2: 1.25% @ age 65

Former Gov. Pete Wilson opened the second tier pension program in the early 1990s to lower benefits for new state employees, who paid nothing toward their retirement. A 1999 law allowed employees to switch to the traditional pension plan. Most did.

Gov. Jerry Brown’s 2013 pension law required the relatively few second-tier members remaining to begin contributing toward their retirement accounts.