Glossary of Terms
This glossary provides clear explanations of terms used throughout this site. These definitions can help you understand the benefits available to you within the requirements of the County Employees Retirement Law (CERL), the Public Employee’s Pension Reform Act (PEPRA), and applicable accounting and actuarial standards.
Member Benefits and Retirement Terms
Active Member
A permanent, full-time or part-time employee currently working for a SCERS-covered employer who receives pension-eligible compensation from which retirement contributions are deducted through payroll and remitted to SCERS.
Additional Retirement Credit (ARC)
Between May 2007 and December 31, 2012, Active Members of SCERS were allowed to purchase up to five (5) years of Additional Retirement Credit or “ARC” time to increase total Service Credit with SCERS. Unlike other types of service purchases, ARC was not based on prior government or public agency employment. Purchase of ARC is now prohibited by law.
Annuity
A series of payments paid to a member for the member’s lifetime (Unmodified Allowance) or for both the member’s and the member’s beneficiary’s lifetime (Optional Settlement joint and survivor).
Beneficiary(ies)
The person(s) designated by a member or statute to receive, or who has received or is receiving, benefits or payments from SCERS upon the death of a SCERS member.
Benefit Calculator
A tool SCERS provides on its website for members to estimate the monthly Service Retirement allowance they may be eligible to receive from SCERS.
Benefit Tier
The benefit level applicable to a member based on Membership Category, Participating Employer and date of hire or re-hire in employment subject to SCERS membership.
COLA (Cost-of-Living Adjustment)
An annual adjustment, if any, applied to an eligible retiree’s monthly allowance determined based on changes in the Consumer Price Index applicable to SCERS. The maximum COLA is set by law and varies by membership tier.
Compensation Earnable / Pensionable Compensation
The portion of your pay that counts toward retirement contributions and benefit calculations. Not all pay elements are pension-eligible and are determined by your plan and tier.
Continuance
A monthly benefit paid to an eligible survivor after an eligible member’s death, typically for the survivor’s lifetime.
Deferred Member
An active member or SCERS who terminates SCERS-covered employment and left member contributions on deposit with SCERS. May be vested or non-vested.
Defined Benefit Plan
A retirement plan that provides a lifetime monthly allowance based on a formula (age, service credit, and final compensation). SCERS is a defined benefit plan.
Defined Contribution Plan
A retirement account, like a 401(k) or 457(b) where employees and/or employers contribute a fixed amount. The funds are invested, with the final retirement payment depending on account performance.
Disability Retirement
A type of monthly benefit that may be granted by the Board when a member proves based on medical evidence that the member is permanently incapacitated from performing the duties of the member’s position. The disability may be work-related (see definition of Service-Connected Disability Retirement) or not work-related (see definition of Nonservice-Connected Disability Retirement).
Eligible Survivor
A person who may qualify under law for continuing benefits after a member’s death, such as a spouse, registered domestic partner, or minor child.
- Eligible Spouse – the deceased member’s surviving spouse/registered domestic partner, if married/registered at least one year prior to the date of death.
- Eligible Minor Child – The member’s natural or adopted unmarried child under the age of 18, or under age 22 if regularly enrolled as a full-time student in an accredited school.
Final Compensation
The average pension-eligible compensation used in calculating a retirement allowance. For Legacy members, this may be the highest 12 or 36 consecutive months, depending on tier. For PEPRA members, it is based on the highest 36 consecutive months.
Legacy Member
A member hired before January 1, 2013.
PEPRA Member
A member hired on or after January 1, 2013, subject to the Public Employees’ Pension Reform Act (PEPRA). PEPRA members are covered by PEPRA rules regarding contributions, compensation and benefits.
Member’s Affidavit
A form issued and maintained by SCERS that an employee must complete and submit to SCERS when first establishing membership in SCERS. Also used by members to update personal status, mailing address, or beneficiary designation on file with SCERS.
Member Contributions
For active members, means the amount deducted biweekly from a member’s salary for retirement and transmitted to and held by SCERS for that member, the accumulated balance of which receives semi-annual interest credit from SCERS.
For members eligible for a distribution from SCERS (as in a withdrawal after the member terminated SCERS-covered employment), means the total account balance held by SCERS for that member that includes all biweekly contributions, any additional contributions the member paid because of the member’s election to purchase Permissive Service Credit or to redeposit previously withdrawn contributions, plus interest accumulated in the member’s account as a result of semi-annual interest crediting from Membership Date through the date of transfer or payment by SCERS.
Membership Category
The designation assigned to each job classification eligible for SCERS membership that determined the level of benefits that applies to service accrued by a member while in that job classification. There are two Membership Categories:
- Safety Membership applies to active law enforcement, firefighting or other positions that have been designated as Safety.
- Miscellaneous Membership applies to all other positions that are not designated for Safety Membership.
Membership Date
The date a person employed by a Participating Employer in a permanent full-time or part-time position establishes membership in SCERS. Generally, it is the first day of employment in a position and time base eligible for SCERS membership.
Nonservice-Connected Disability Retirement (NSCDR)
A type of retirement that may be granted by the Board when a member proves based on medical evidence that the member is permanently incapacitated from performing the duties of the member’s position and the member’s employment did NOT cause or contribute to the incapacity.
Optional Settlement
One or more alternative forms of distribution for a member’s lifetime monthly retirement benefit that a member may elect at the time of retirement. An Optional Settlement modifies the member’s highest monthly retirement benefit allowance payable, known as the Unmodified Allowance, typically to provide a continuing benefit to the member’s beneficiary through a joint and survivor Annuity.
Participating Employer
The County of Sacramento, the Superior Court in Sacramento County, and the special district employers that have taken formal action to provide the retirement and related benefits administered by SCERS to their employees.
Permissive Service Credit
Periods of work a member may have performed prior to SCERS membership for one or more Participating Employers or for other public agencies or the federal government, or periods of uncompensated medical leave after becoming a SCERS member, for which a member may elect to pay the required additional Member Contributions as determined by SCERS to increase total Service Credit with SCERS.
Reciprocity
An arrangement defined by law and agreements between state and local public retirement systems in California that allows one system to recognize the membership, service credit, and pension-eligible compensation earned while a person is a member of another system, subject to specified rules and conditions. This allows public employees to “connect” their public employment in California for retirement benefit purposes. The eligibility and benefits of Reciprocity are specified in statute and are intended to encourage a career in public service in California.
Reciprocal Member
A person who becomes a member of SCERS after establishing membership in a Reciprocal System and the prior Reciprocal System recognizes Reciprocity for the person’s period of SCERS membership, or a SCERS Deferred Member who establishes membership in a Reciprocal System and SCERS recognizes the Reciprocity for the Deferred Member’s period of membership in the Reciprocal System.
Retired Member
A member receiving a monthly Service Retirement or Disability Retirement benefit allowance from SCERS.
Retirement Allowance
The monthly pension benefit you receive from SCERS, calculated using your age at retirement, years of service credit, and final compensation.
Service-Connected Disability Retirement (SCDR)
A type of retirement that may be granted by the Board when a member proves based on medical evidence that the member is permanently incapacitated from performing the duties of the member’s position that that the incapacity is a result of injury or disease arising out of and in the course of the member’s employment and such employment substantially contributes to the incapacity.
Service Credit
Credit accrued in SCERS by a member who receives pension-eligible compensation for time worked (or paid leave) with a Participating Employer from which Member Contributions for retirement are deducted. SCERS members earn one year of service credit for working one year of regular, full-time hours. A member’s total Service Credit is used to establish eligibility for retirement benefits and the amount of such benefits.
Service Retirement
A type of retirement granted by the Board after a member has met the age and service eligibility requirement, filed an application for Service Retirement with SCERS, and terminated all employment with all Participating Employers.
Social Security Reduction Factor
A dollar amount determined by the member’s Membership Category and age at retirement that is multiplied by the member’s years of SCERS-covered service that is integrated with Social Security to determine the amount by which the member’s monthly Service Retirement benefit allowance will be reduced.
Unmodified Allowance
The standard retirement option that pays the highest monthly benefit to the retiree, with a 60% continuance to an eligible surviving spouse, registered domestic partner or minor child. Alternative optional forms of payment are available, reducing the unmodified allowance payable.
Vested
The point at which you qualify for a lifetime monthly retirement allowance, even if you leave employment before retirement. Members are vested after attaining five years of full-time service credit.
Actuarial, Investment, and Financial Terms
Accrued Liability
The total value of benefits earned by members, retirees, and beneficiaries to date, as measured by the plan’s actuary.
Actuarial Assumptions
Projections used by actuaries to estimate future events, such as rates of retirement, salary increases, investment returns, and life expectancy.
Actuarial Valuation (Actuarial Study)
A type of appraisal performed by a pension actuary in accordance with professional standards that requires making economic and demographic assumptions to estimate current and projected liabilities. The assumptions are typically based on a mix of statistical studies and experienced judgment. Forms the basis for the actuary to determine the annual employer and member contribution rates which, together with investment earnings, will provide sufficient funding to pay the benefits earned by SCERS members.
Actuarial Funding Ratio (Funded Status)
The ratio of the system’s assets to its liabilities. A ratio of 100% means the system has exactly enough assets to cover all promised benefits.
Actuarial Present Value (APV)
The current value of future benefits, contributions, or payments, based on actuarial assumptions about interest and mortality.
Annual Comprehensive Financial Report (ACFR)
SCERS’ official financial report, prepared each year in accordance with accounting standards, that provides detailed information on plan assets, liabilities, revenues, and expenses.
Board of Retirement
The governing body responsible for SCERS’ administration and investments. The Board sets policy, oversees actuarial valuations, and ensures the system is managed in accordance with law.
Contribution Rates
The percentage of pension-eligible pay that members and employers contribute to fund SCERS benefits. Rates are set annually based on actuarial valuation.
Experience Study
A periodic review that compares actual member and plan experience (retirement ages, salary growth, mortality rates, etc.) to actuarial assumptions, and recommends adjustments.
GASB 68
An accounting standard issued by the Governmental Accounting Standards Board that requires public employers to report their share of pension liabilities in their financial statements.
Investment Return
The gain or loss on SCERS’ invested assets over time. Investment returns are a major source of funding for retirement benefits.
Normal Cost
The portion of the cost of retirement benefits allocated to the current year of service, as determined by the actuary. Under PEPRA, members pay at least 50% of the normal cost.
Popular Annual Financial Report (PAFR)
A summarized version of the ACFR designed to provide members and the public with an accessible overview of SCERS’ financial position.
Unfunded Actuarial Accrued Liability (UAAL)
The portion of total liabilities not covered by plan assets. UAAL is funded over time through employer contributions.