Reciprocity

Reciprocity is an agreement among certain California public retirement systems, including SDCERS, which allows members to change jobs between “reciprocal” retirement systems in California and combine service credit in each system to meet vesting and eligibility requirements.
 
SDCERS has reciprocity with CalPERS and San Diego County, as well as most other public retirement systems in California – major exceptions include Judges’ Retirement Systems (JRS and JRS II), Legislators’ Retirement System (LRS), California State Teachers’ Retirement System (CalSTRS), University of California Retirement Plan (UCRP), and any federal retirement system. Please contact SDCERS to confirm if a specific California public agency has a reciprocal agreement with SDCERS. If you meet the requirements, you may establish reciprocity when leaving SDCERS for a reciprocal agency, or when entering SDCERS if coming from a reciprocal agency.

It is important to understand that SDCERS does not govern reciprocity for other retirement systems, and legislation can change the rules regarding reciprocity. Therefore, questions relating to the rights, benefits, and obligations under any other public retirement system should be addressed directly to that system. Please note that your SDCERS plan document contains specific rules surrounding reciprocity (e.g., your retirement date must be simultaneous at all reciprocal systems, you must submit your retirement application in advance of your retirement date, you cannot have any overlapping periods of employment, there must not be more than a 6-month break in between periods of employment, etc.), which must be followed in order for you to establish and maintain reciprocity – SDCERS does not have the authority to make any exceptions to these rules. 

Please note that if you are retiring with reciprocity, your first pension payment may be delayed. This is because SDCERS and the reciprocal agency have to communicate and share certain information before SDCERS can process your benefit payments. Sometimes it takes longer to receive this information from the reciprocal agency due to circumstances outside of SDCERS’ control. However, your first pension payment will be retroactive to your retirement date. 

If you currently work for the City, Port, or Airport and are considering employment with a public agency that has reciprocity with SDCERS (outgoing reciprocity), or if you are thinking of coming to SDCERS from a reciprocal agency (incoming reciprocity), there are specific criteria you must meet to establish reciprocity with SDCERS.

• Ensure the other system participates in California’s reciprocity agreement.
• Begin employment with your new job in the reciprocal system within 6 months of your termination date at your previous job.
• Ensure that you do not overlap employment or service credit with SDCERS and the reciprocal agency.
  • SDCERS will not allow reciprocity if you have not terminated employment with an SDCERS plan sponsor prior to your start date with the new employer, or vice versa.
  • Do not use vacation leave in a way that would cause an overlap of service credit when you start your next job.
• Submit a request and be granted reciprocity by both agencies.

Note: It is highly recommended to submit your request for incoming reciprocity as soon as possible, in order to have your entry age (and corresponding contribution rate) adjusted, which takes place on a prospective basis beginning with the first pay period after reciprocity is approved.

Outgoing Reciprocity
SDCERS will recognize outgoing reciprocity when all of the following criteria are met:

• You must terminate employment with the City, Port, or Airport (note that going on leave is not equivalent to terminating);
• You must leave your pension contributions with SDCERS;
• You must begin employment (on payroll, not a job offer) with the reciprocal agency and become a member within 6 months of terminating membership with SDCERS; and
• You must submit a reciprocity request via your SDCERS Member Portal account, unless SDCERS receives a reciprocity request from the reciprocal agency first.

Incoming Reciprocity
SDCERS will recognize incoming reciprocity when all of the following criteria are met:

• You must become a Member of SDCERS within 6 months of terminating employment with the prior reciprocal agency; and
• You must leave your contributions on deposit with the retirement system you are leaving.

After SDCERS receives your reciprocity request, staff will contact the reciprocal agency you have listed to request the information needed to establish reciprocity. Once all data is received and processed, SDCERS will send you a letter stating whether or not reciprocity has been established. 

IMPORTANT: SDCERS will not be able to confirm whether you will be eligible to establish reciprocity until you join the system, submit your reciprocity application, and SDCERS receives the requisite data from the reciprocal agency. This means if you are considering employment with an SDCERS plan sponsor or reciprocal agency, and you contact SDCERS to inquire about establishing reciprocity, SDCERS staff will only be able to tell you the requirements to establish reciprocity – we cannot guarantee that you will meet these requirements until you become a member in SDCERS’ system (or the reciprocal system) and you apply for reciprocity via your Member Portal account. 

Establishing reciprocity allows you to preserve certain components of your retirement benefit when you move from one reciprocal system to another. There are several advantages that may come with reciprocity.

Entry Age – SDCERS determines your member contribution rate (how much you contribute toward your retirement from each bi-weekly paycheck) based on your age when you became an SDCERS Member. Once you establish incoming reciprocity, SDCERS will prospectively (from the date reciprocity was approved, moving forward) use your age when you first became a Member of the reciprocal agency. Likewise, if you leave SDCERS membership for a reciprocal system, and that system also bases your retirement contribution rate on your age at entry, that system may determine its contribution rate using your age at the time you first entered SDCERS membership. This could benefit you, because typically contribution rates are lower for Members with lower entry ages.

Highest Final Average Compensation Used to Calculate All Benefits – When you receive your pension benefits from reciprocal systems, each system may use the highest final average compensation in any reciprocal system you were a member of to calculate your retirement benefit, as long as you retire on the same date from all systems. Systems generally use either a 12 or 36-month consecutive highest final average compensation, depending on what is allowed under each plan (calculation might be different for each system). Please note that if you have reciprocity with another system, the final average compensation that SDCERS will report to the reciprocal system is your final compensation used to calculate your pension benefit when you service retired or entered DROP – the final compensation SDCERS will report to the reciprocal agency will not be based on compensation received while you are participating in DROP.

Plan Tier – If you were hired by a reciprocal agency before 2013 and establish reciprocity with either the Port or Airport on or after January 1, 2013, you may be eligible to join the Port or Airport’s most recent non-PEPRA plan tier once reciprocity is established. “PEPRA” stands for the California Public Employees’ Pension Reform Act of 2013, which is a set of state laws intended to address structural concerns related to California public employee pensions and places limits on pensionable compensation for certain public employees hired on or after January 1, 2013. The Port and Airport’s PEPRA plan tiers generally have lower pension benefits compared to the non-PEPRA plan tiers, so joining the non-PEPRA plan tier may be more desirable. This concept may apply to outgoing reciprocity as well – if you were initially hired by an SDCERS plan sponsor before 2013 and subsequently establish reciprocity after 2013 at a public agency that is affected by PEPRA, you may be able to join that agency’s most recent non-PEPRA plan tier. However, you will need to contact the subsequent employer’s retirement system for more information on this subject. (Note: This concept does not apply to incoming reciprocity with the City, as the City is not governed by PEPRA – your plan tier with the City will depend on your initial hire date as a City employee, regardless of your hire date with a reciprocal agency.)

Meeting Vesting and Retirement Eligibility Requirements – Service credit earned under each reciprocal system may be used to meet each system’s vesting and retirement eligibility requirements. See the example below:

• You earn 7 years of service credit from SDCERS while working for the City of San Diego. You leave your job with the City of San Diego for a job with the County of Los Angeles and establish reciprocity. As a City Member, you must have at least 10 years of service credit to be eligible for a service retirement at a certain age. In this example, you only have 7 years of service credit when you leave City employment. However, after working another 13 years for the County of Los Angeles, that time will count toward the 10-year minimum or “vesting” requirement of SDCERS, and you will be vested in both systems, as you will have also met the County of Los Angeles’ service vesting requirement.
  
  Calculation of benefits for each system is not based upon the total 20 years of service credit, nor is there any transfer of funds or service credit between reciprocal systems. Instead, each monthly pension benefit is paid separately by each agency; SDCERS will pay you a pension benefit based on the 7 years of service credit you earned at the City, and the County of Los Angeles’ retirement system will pay you a pension benefit based on the 13 years you worked for the County of Los Angeles. Both benefits would be based on your highest final average compensation in either system. However, note that the two systems may have different calculations to determine your final average compensation used in their pension benefit formula.

It is important to note that you must meet both systems’ vesting requirements in order to maintain reciprocity and retire simultaneously. Let’s look at another example demonstrating this requirement:

• You work for the City of San Diego for 2 years before moving to the County of Los Angeles and establishing reciprocity. In this example, let’s assume the plan tier you join with the County of Los Angeles only requires you to have 5 years of service credit in order to become service-vested. If you work for the County of Los Angeles for 5 years, you will have 7 years of service credit total. That is enough time to be vested with the County of Los Angeles, but not enough to be vested with the City of San Diego, which requires at least 10 years of service credit. If you retire with the County of Los Angeles after 5 years, you will break reciprocity with SDCERS, because you would not be able to retire from the City of San Diego simultaneously, as you would not be service-eligible under the City’s plan.

In the above example, we considered two systems with different service-vesting requirements; however, please note that age-eligibility requirements would have the same effect (e.g., if you retire from a reciprocal system with a lower age requirement before you have met your SDCERS plan sponsor’s higher age requirement, you would break reciprocity with SDCERS because you would not be age-eligible to retire from both systems simultaneously).

Retirement Date Must Be Same for All Reciprocal Systems – One requirement of reciprocity, as mentioned above, is that you retire from all reciprocal systems on the same day. You must apply for retirement from each system separately, completing each system’s unique application process. Failure to do so could result in breaking reciprocity, which could result in one or both systems retroactively recalculating your contribution rate throughout your career and owing increased contributions. (Note: For reciprocity purposes, if you plan to participate in DROP, you must retire from a reciprocal system on the same day as your DROP exit date, not your DROP entry date.)

Disability Retirement – If you receive a disability retirement from a reciprocal system, you will receive a reciprocal disability retirement benefit from SDCERS instead of a service retirement benefit. Be sure to contact SDCERS immediately if you have left SDCERS, established reciprocity, and are now applying for a disability retirement with your reciprocal agency.

Consequences of Breaking Reciprocity – If you have established incoming or outgoing reciprocity with SDCERS, you may be eligible for reciprocal benefits. However, if you withdraw your contributions from SDCERS or from the reciprocal agency, or fail to retire from the reciprocal agency(ies) concurrently, you will have “broken” reciprocity. Consequences of breaking reciprocity may include:

• Your compensation earned from the reciprocal agency will not be used to calculate your pension benefits from SDCERS. This can change your calculation of pension benefits from SDCERS.
• SDCERS cannot use the service credit you received from the reciprocal agency to determine eligibility for benefits from SDCERS. This can delay or eliminate your eligibility to receive pension benefits from SDCERS.
• If you received a contribution rate reduction due to reciprocity, your contribution rate may be retroactively adjusted because of the loss of reciprocity, and you may be required to pay any underpaid contributions before you can receive any retirement benefits due to you.

SDCERS allows you to receive a refund of your contributions even if you have established reciprocity at a reciprocal agency. However, if you withdraw your contributions, you are no longer eligible for a pension benefit from SDCERS and will break reciprocity with the reciprocal agency.

NOTE: If you have established reciprocity between SDCERS and a reciprocal agency, and subsequently receive an industrial disability retirement benefit from the reciprocal agency, your SDCERS benefit will likely be reduced – please contact SDCERS in advance of applying for a disability retirement benefit from a reciprocal agency for more information. 

To submit a reciprocity request, log on to your secure Member Portal. Once you have accessed your personal Member Portal account, click on “Reciprocity” from the left menu, select the Reciprocal Agency Name and Reciprocity Direction from the drop-down menus, and click the Submit button. You will receive a letter via U.S. Mail stating whether your reciprocity has been approved or denied.