Regular Compensation

Much controversy has surrounded the definition of “Regular Compensation” since the passage of Chapter 21 of The Acts of 2009, “An Act Providing Responsible Reforms in the Pension System.” The Retirement Board must be guided by the statute, regulations, and applicable case law to determine what is and what is not “Regular Compensation” for retirement purposes.

In considering what “Regular Compensation” is the Board will examine the following characteristics of the payments:

  • Compensation received exclusively as wages by an employee for services performed in the course of employment for his employer.
  • The base salary or other base compensation of an employee.
  • “Other base compensation” pre-determined, non-discretionary, guaranteed payments paid by the employer to similarly situated employees.

In considering what “Regular Compensation” is the Board will examine the following characteristics of the payments.

Payments made by the employer to the employee because of

  1. The character of the work
  2. The employee’s length of service
  3. The time at which the work takes place
  4. Educational incentives
  5. Payments for training and licensing
  6. Payments made as a percentage of back pay
  7. Payments for holding certain certificates

The Retirement Board has developed a “Regular Compensation Check List” for employers to utilize when confronted with questions about certain payments. This “Regular Compensation Check List” is included on the next page.

In all instances the Retirement Board will be the final judge as to what payments will be considered “Regular Compensation” for retirement purposes.

Click here for checklist