CA Public Pensions Law Blog

CalPERS has updated the 2018 compensation limits for classic and new members, effective immediately.  The compensation limit for classic members in 2018 is now $275,000, a $5,000 increase from 2017.  For new members, the compensation limit is now $121,388 for Social Security participants and $145,666 for non-Social Security participants, which are increases of $2,613 and $3,136 respectively.  Employees with membership dates before July 1, 1996 are not affected by the compensation limits.

The new compensation limits do not limit the salary an employer may pay; rather, they limit the amount of compensation taken into account under the defined benefit plan.  Items such as overtime, automobile allowances, and lump-sum payouts should be excluded from compensation reported.

Recommendations

We recommend that employers notify their employees of the applicable compensation limits, monitor these limits for each employee, and adjust their reporting accordingly.