EMPLOYERS

This web page is intended to provide general information for employer reporters on Senate Bill 1049 and may not address every situation. Contact your Employer Service Center representative if you have questions or need assistance. Review Partial Year Salary Limits for member information.

Starting in 2020, if you employ a member for less than 12 months in a calendar year, the member’s subject salary will be limited based upon a “partial year” average limit of $16,250 a month* (including any eligible lump-sum payments for Tier One/Tier Two members).

Prior to 2020, only OPSRP members (hired after August 28, 2003) were impacted by partial year salary limits. Beginning January 1, 2020, partial year salary limits apply to all members (Tier One, Tier Two, and OPSRP).

*The limit is indexed annually to the Consumer Price Index (CPI) [All Urban Consumers, West Region]. The Partial Year Salary Limits chart will be updated each year.

 

​What are the partial year salary limits starting in 2020?

Starting with calendar year 2020, if your employee has less than 12 months of “active membership” in a calendar year (whether due to beginning PERS membership, retiring, or otherwise leaving their PERS-covered position anytime during the calendar year), their subject salary, as reported to PERS, could be limited by the “partial year” salary limit.

You can calculate the “partial year” limit by counting the number of months of active membership for the employee, divided by 12 months, and then multiply that fraction by the annual salary limit ($195,000* in 2020). Use the chart below to find the 2020 partial year limit.

Partial Year Salary Limits

Months of “Active Membership” 1 month 2 months 3 months 4 months 5 months 6 months 7 months 8 months 9 months 10 months 11 months Full Year
Months You Work ÷ 12 = Proration Factor 0.083333 0.166667 0.250000 0.333333 0.416667 0.500000 0.583333 0.666667 0.750000 0.833333 0.916667 1.000000
2020 Partial Year Limits $16,249.94 $32,500.07 $48,750.00 $64,999.94 $81,250.07 $97,500.00 $113,749.94 $130,000.07 $146,250.00 $162,499.94 $178,750.07 $195,000.00*

*The limit is indexed annually to the Consumer Price Index (CPI) [All Urban Consumers, West Region].

For example, if a member worked five months in calendar year 2020, you would multiply (5 ÷ 12), which is 0.416667, by $195,000, which equals $81,250.07.

  • In this situation, any salary over $81,250.07 (including eligible lump-sum payments for Tier One/Tier Two members) would be reported as “non-subject salary” and would not be included in determining Individual Account Program (IAP) contributions and possibly the calculation of the member’s Final Average Salary.

The salary limit will be prorated based on the number of months a member is employed with a PERS-participating employer in a qualifying position during that year. See How do you correctly calculate a “partial year”? below for more information.

As a PERS-participating employer, it is your responsibility to accurately report to PERS your employees’ subject and non-subject salary. You are responsible for designating positions as “active” and “qualifying.” Employers should use the Payment Categories chart to determine subject vs. non-subject salary, especially which lump-sum payments can be included for Tier One or Tier Two members.

If you need assistance, please contact your Employer Service Center representative.

 

How do you correctly calculate a “partial year”?

Beginning January 1, 2020, the formula to calculate a partial year limit is:

 
 

To clarify: Any month in which a member has “active membership” is counted as a month in the numerator. The denominator is always 12.

  • For example, 7 months of active membership ÷ 12 months = 0.583333.
    • 0.583333 × annual salary limit = prorated salary limit for 7 months.

A member does not have to be employed a “full month” for it to count as active membership (see examples below).

Note that “active membership” continues through what you, the employer, reports to PERS as the member’s “Termination Date,” not the “Last Day of Service.”

Notes for special situations:

  • Any partial month is counted. For instance, if a member was employed on January 1, 2020, through August 3, 2020, they would have eight months of active membership in 2020.
  • Months with Leave Without Pay (LWOP) during active membership are counted.
  • Any full month (when you, the employer, have not officially “terminated” the member in the PERS system) that the member had active qualifying membership, even if they had no hours or salary reported, is counted.
  • Full months of non-qualifying employment are not counted.

If you have questions, please contact your Employer Service Center representative.


Example 1: Less than 12 months of active employment

An existing member is hired with a new PERS-participating employer on February 27, 2020, in a qualifying position, and subsequently terminates employment on August 3, 2020. The member has seven months of active membership during the 2020 calendar year (both February and August are counted).

7 months of active membership in 2020 7 months
Divided by 12 months ÷ 12 months
Proration factor for salary limitation 0.583333
2020 Annual Salary Limitation × $195,000
Prorated salary limitation for 2020 $113,749.94

 

This member’s 2020 salary limit is $113,749.94. This number would be used for employee and employer contributions and possibly in the calculation of Final Average Salary.


Example 2: A new member

A public employee starts employment on December 10, 2019, in a qualifying position, and continues to work through all of 2020 and into the next year. Because the employee has to complete a six-month waiting period before establishing membership, the first six months of employment do not count as months of “active membership.” This member’s “Contribution Start Date” (“Membership Date,” as shown on a Member Annual Statement) would be July 1, 2020. IAP contributions would begin on July 1, 2020, once membership is established. By continuing to work for the entire 2020 calendar year, this member would have six months (July-December) of “active membership” in 2020.

6 months of active membership in 2020 6 months
Divided by 12 months ÷ 12 months
Proration factor for salary limitation 0.50
2020 Annual Salary Limitation × $195,000
Prorated salary limitation for 2020 $97,500.00

 

This member’s 2020 salary limit is $97,500. This number would be used for employee and employer contributions and possibly in the calculation of Final Average Salary. Note: The salary earned during the member’s six-month waiting period, as they do not count as months of active membership, would not be counted toward the $97,500 limit.


Example 3: Partial year and December termination

An existing member is employed with a PERS-participating employer in a qualifying position from August 25, 2020, and subsequently terminates employment on December 15, 2020. The member receives their final pay check on January 15, 2021. The member has five months of “active membership” in 2020 (August-December).

5 months of active membership in 2020 5 months
Divided by 12 months ÷ 12 months
Proration factor for salary limitation 0.416667
2020 Annual Salary Limitation × $195,000
Prorated salary limitation for 2020 $81,250.07

 

The salary paid on January 15, 2021, would be included with the member's 2020 salary. This member’s 2020 salary limit is $81,250.07. This number would be used for employee and employer contributions and possibly in the calculation of Final Average Salary.


Example 4: Partial year by separation from employment and Tier One Lump-sum vacation payout

An existing Tier One member is employed with a PERS-participating employer in a qualifying position and subsequently terminates employment on February 27, 2020, in order to retire March 1, 2020. The member’s yearly salary is normally under the annual limit of $195,000. The member has two months of active membership in 2020. The member receives their final check on March 15, 2020, which contains $20,000 of a lump-sum vacation payout as part of their subject salary. Regular salary is $10,000 for each month of January and February 2020.

2 months of active membership in 2020 2 months
Divided by 12 months ÷ 12 months
Proration factor for salary limitation 0.166667
2020 Annual Salary Limitation × $195,000
Prorated salary limitation for 2020 $32,500.07


This member’s 2020 salary limit is $32,500.07. Although the member’s salary for 2020 was $40,000, including the lump-sum vacation payout, the member’s salary subject for contributions would be $32,500.07 for 2020.

Note: For OPSRP members, lump-sum vacation payouts and other lump-sum payments not included in subject salary and can be reported as they usually would be. Employers should use the Payment Categories chart to determine subject vs. non-subject salary, especially which lump-sum payments can be included for Tier One or Tier Two members.


Reporting Salary Prior to 2020

While somewhat outdated, see Employer Announcement #89 (2014) for prior reporting for partial year limits for years before 2020. Before 2020, only OPSRP members were impacted by a partial year salary limit.

 

OPSRP Partial Year Salary Limits: 2004-2019

  Number of Months Worked
Year 1 2 3 4 5 6 7 8 9 10 11 Full Year
2019 $23,333.33 $46,666.67 $70,000.00 $93,333.33 $116,666.67 $140,000.00 $163,333.33 $186,666.67 $210,000.00 $233,333.33 $256,666.67 $280,000.00
2018 $22,916.67 $45,833.34 $68,750.00 $91,666.67 $114,583.34 $137,500.00 $160,416.67 $183,333.34 $206,250.00 $229,166.67 $252,083.33 $275,000.00
2017 $22,500.00 $45,000.00 $67,500.00 $90,000.00 $112,500.00 $135,000.00 $157,500.00 $180,000.00 $202,500.00 $225,000.00 $247,500.00 $270,000.00
2016 $22,083.33 $44,166.67 $66,250.00 $88,333.33 $110,416.67 $132,500.00 $154,583.33 $176,666.67 $198,750.00 $220,833.33 $242,916.67 $265,000.00
2015 $22,083.33 $44,166.67 $66,250.00 $88,333.33 $110,416.67 $132,500.00 $154,583.33 $176,666.67 $198,750.00 $220,833.33 $242,916.67 $265,000.00
2014 $21,666.67 $43,333.33 $65,000.00 $86,666.67 $108,333.33 $130,000.00 $151,666.67 $173,333.33 $195,000.00 $216,666.67 $238,333.33 $260,000.00
2013 $21,250.00 $42,500.00 $63,750.00 $85,000.00 $106,250.00 $127,500.00 $148,750.00 $170,000.00 $191,250.00 $212,500.00 $233,750.00 $255,000.00
2012 $20,833.33 $41,666.67 $62,500.00 $83,333.33 $104,166.67 $125,000.00 $145,833.33 $166,666.67 $187,500.00 $208,333.33 $229,166.67 $250,000.00
2011 $20,416.67 $40,833.33 $61,250.00 $81,666.67 $102,083.33 $122,500.00 $142,916.67 $163,333.33 $183,750.00 $204,166.67 $224,583.33 $245,000.00
2010 $20,416.67 $40,833.33 $61,250.00 $81,666.67 $102,083.33 $122,500.00 $142,916.67 $163,333.33 $183,750.00 $204,166.67 $224,583.33 $245,000.00
2009 $20,416.67 ​ $40,833.33  $61,250.00  $81,666.67 $102,083.33 $122,500.00 $142,916.67 $163,333.33 $183,750.00 $204,166.67 $224,583.33 $245,000.00
2008 $19,166.67  $38,333.33 $57,500.00 $76,666.67 $95,833.33 $115,000.00 $134,166.67 $153,333.33 $172,500.00 $191,666.67 $210,833.33 $230,000.00
2007  $18,750.00 $37,500.00 $56,250.00 $75,000.00 $93,750.00 $112,500.00 $131,250.00 $150,000.00 $168,750.00 $187,500.00 $206,250.00 $225,000.00
2006 $18,333.33 $36,666.67 $55,000.00 $73,333.33 $91,666.67 $110,000.00 $128,333.33 $146,666.67 $165,000.00 $183,333.33 $201,666.67 $220,000.00
2005 $17,500.00 $35,000.00 $52,500.00 $70,000.00 $87,500.00 $105,000.00 $122,500.00 $140,000.00 $157,500.00 $175,000.00 $192,500.00 $210,000.00
2004 $17,083.33 $34,166.67 $51,250.00 $68,333.33 $85,416.67 $102,500.00 $119,583.33 $136,666.67 $153,750.00 $170,833.33 $187,916.67 $205,000.00

 

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