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OCERS History

 
Serving Orange County Employees
For more than 70 years, the Orange County Employees Retirement System (OCERS) has been providing retirement, death, disability, and cost-of-living benefits to employees of the County and certain districts.  During that time, OCERS' membership has increased from less than 1,000 members in 1945 to more than 27,000 active and deferred members and more than 16,000 payees (retired members and beneficiaries) as of December 2016.

OCERS' origins actually date back to the fall of 1944 when the Orange County Board of Supervisors called for the submission of a proposition to the people of Orange County. This Proposition requested that the County accept the provisions of the County Employees Retirement Act of 1937 This proposition was approved by a majority of voters at the November 7, 1944 General Election, and as a result, OCERS was officially established on January 1, 1945.

Upon OCERS' creation, a Retirement Board consisting of five members (the County Treasurer, two active elected members, and two qualified electors of the County) was established to govern the plan.  Today, there are nine Retirement Board members and an alternate.

Relationship to the County
During its more than 70 year history, OCERS has worked to define its changing relationship with Orange County.  The Retirement System employees were considered part of the County Treasurer's Office from 1945 until 1973, when provisions were added to the Government Code to charge administrative costs for the Retirement System to the Retirement System's earnings.  Employees of the Retirement Office continued to be considered Treasurer's Office employees, however, until February 1, 1989, when the Retirement System was established as a department separate from the Treasurer's Office.  Since that time, the Administrator has reported only to the Retirement Board.

The next step was for OCERS to work toward complete separation from Orange County.  The stage was set for this separation in 1992 when the California Pension Protection Act (Proposition 162) was passed.  This act established that the Retirement Board has "plenary authority".  Complete separation was finally declared by a Retirement Board Resolution in February 1995. In addition, the passage of AB1992 on June 27, 2002 made OCERS an independent district.

Membership
Membership requirements for OCERS have experienced significant change over the years.  Existing officers and County employees became members of OCERS on the date the Retirement System began.  After that, employees became members on the first day of the month following the date they became regular employees.  In 1967, the date of membership changed to the date the employee was hired in an eligible position.  Part-time employees, who had been excluded from membership initially, were allowed to join the Retirement System provided they work half-time or more.  Outside public districts located within the county were allowed to join the Retirement System with the approval of the Retirement Board.
Benefits and Contributions
The benefits offered to OCERS' members have changed over time as well.  Generally, benefits are set by the Board of Supervisors in accordance with the California Government Code.  In 1945, the benefit in effect was a "money purchase plan," which provided a benefit determined by the member's age at retirement and the total amount contributed, plus accumulated interest.  The benefit changed to a "defined benefit plan" on June 1, 1962, and the benefit payable was determined by the member's age and one-sixtieth of his or her highest three-year average salary for each year of service.  It also allowed a continuance to a spouse under the most valuable option. The benefit increased on July 3, 1973, to one-fiftieth of the member's highest one-year average salary, then was reduced on September 21, 1979, to one-sixtieth of the member's highest three-year average salary for those hired on or after that date (called Tier II members.) In June 2002, Assembly Bill 1992 was signed into law giving the County and other public agencies the ability to negotiate different benefit formulas with their employees. Currently, OCERS' various plan sponsors have adopted a number of different plan types. Members with an entry date prior to September 21, 1979 will have their highest one-year average salary used to determine their retirement allowance while members hired after September 21, 1979 will have their highest three-year average salary used to determine their retirement allowance.  For a new member hired on or after January 1, 2013 who was not a member of a public retirement system prior to that date, could not establish reciprocity from public employment prior to January 1, 2013 or had a break in active OCERS’ membership of more than six months and returned to a different employer covered by OCERS are subject to a reduced retirement benefit formula, reduced compensation rules and new retirement eligibility criteria as determined by Assembly Bill 340 (signed into law in September 2012).

To retire in 1945, members needed to be age 55 or older and have 10 or more years of service (service before January 1, 1945, counted).  Members could retire after 30 years of service at any age or at 70 with no minimum service requirement.  After 1962, Safety Members could retire at or after age 55 with 10 or more years of service or after 30 years of service regardless of age.  For General Members, mandatory retirement age was 70, while for Safety Members, it was age 60.  The mandatory retirement age for General Members was lowered to 67 in the 1970s, then raised to 70, and finally repealed in 1983.  Effective July 7, 1971, the minimum age to retire was lowered to age 50 and the average salary was changed to a one-year average for both General and Safety members.  As of January 1, 1975, Safety Members were able to retire after 20 years of service regardless of age.  The retirement eligibility requirements for those hired on or after January 1, 2013 is age 52 with five years of service for general members and age 50 with five years of service for safety members.

In 1945 member contributions were determined by the member's age when they joined the Retirement System.  Different rates were set by the actuary based on age and sex. Female members paid slightly higher rates; however women's slightly higher age factors resulted in slightly higher benefits.  Effective December 30, 1976, rates were standardized to equal rates for men and women.  Contribution rates for Tier I, Tier II, General and Safety Members differ and are set by the Board of Retirement based upon provisions of the 1937 Act and actuarial data.  For members hired on or after January 1, 2013, employers and employees must equally share normal cost and employees must pay at least 50% unless it is collectively bargained for the employee to pay more.

California Public Employees’ Pension Reform Act of 2013 (PEPRA)

Other Government Code sections applicable to CERL Systems

Conclusion
Throughout all these changes over the more than 70 years, OCERS has remained committed to fulfilling its fiduciary responsibility for the assets and administration of the System in a manner that assures prompt delivery of benefits and related services to the participants and their beneficiaries.
 
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