The Alternate Retirement Program (ARP) is administered by the California Department of Human Resources (CalHR) and is for new, first-time state miscellaneous and industrial employees hired between August 11, 2004, and June 30, 2013.
There are several important milestones in the first four years of state miscellaneous industrial employment that will transition you into full CalPERS membership.
First 24 Months: ARP Period
- You don't receive CalPERS retirement service credit.
- Your retirement contributions go into your ARP account managed by CalHR.
- Your time worked counts toward retirement and health benefit vesting.
Month 25 Forward
- You begin to earn CalPERS retirement service credit.
- You move from ARP into CalPERS First Tier membership.
- Your ARP funds remain at CalHR.
- Your retirement contributions begin to go to CalPERS.
Months 47-49: Decision Time
You'll receive a notice of your upcoming ARP election period in the 45th month following your ARP enrollment date. You'll have three options regarding what to do with your ARP funds once your 47th month arrives:
- Option 1 – Receive CalPERS Service Credit
Transfer your ARP funds to CalPERS and receive retirement service credit for the actual amount of time you worked at no additional cost. More service credit increases your pension benefit allowances. - Option 2 – Distribution of Funds
Receive a lump sum distribution. No service credit is earned for your ARP period; however, your time worked will count toward your retirement and health vesting. - Option 3 – Transfer to Savings Plus 401(k) at CalHR
No service credit is earned for your ARP period; however, your time worked will count toward your retirement and health vesting.
If you select Option 2 or 3 during the ARP election period, or take no action, you can purchase your ARP time with CalPERS at a future date, as long as you meet the eligibility requirements. However, the cost to you'll be substantially higher than the amount in your ARP account. If you wait to purchase your ARP time at a future date, the law requires you to pay the entire present value cost of the service credit, which includes member and employer contribution amounts and is based on your highest pay rate and other actuarial factors.
To help you make important decisions that can affect your future CalPERS retirement benefit:
- Contact your personnel office.
- Refer to our Alternate Retirement Program (PUB 10) (PDF).
- Visit CalHR.
Transitioning from ARP to Full CalPERS Membership
At the end of your 2-year (24-month) ARP period, you'll begin earning CalPERS service credit and receiving an Annual Member Statement each fall. This statement provides a record of your CalPERS contributions, interest, and service credit. Your service while in ARP will not be included in the total until you either:
- Elect to transfer your ARP funds to CalPERS during your ARP election period (47th to 49th month following your ARP enrollment date)
- Purchase ARP service credit any time after your ARP election period but before retirement
To view your Annual Member Statement, you'll need to log in to myCalPERS.
If you separate from CalPERS-covered employment, refund your ARP contributions, and return to CalPERS contracted employment; you can elect to purchase your ARP service. The cost for purchasing ARP service credit is calculated at present value. Present value cost includes member and employer contribution amounts and is based on your highest pay rate and other actuarial factors.
Membership Type
As you transition into CalPERS, you'll be either a state miscellaneous or industrial First Tier retirement plan member, based on your job classification (contact your personnel office for more information). However, after your 24th month of employment, you should receive notice from your personnel office that you're eligible to move to the state miscellaneous or industrial Second Tier plan. You'll have 180 days to make this election.
Effective July 1, 2013, Second Tier members started paying 1.5 percent of earnings in monthly member contributions. This contribution rate will be adjusted annually. Since members in the Second Tier plan make minimal contributions, this plan offers a reduced level of benefits at retirement. Be sure to carefully review the information you're provided before making your decision.
