Pension Spiking History

Legislation passed by the 2014 General Assembly establishes, effective January 1, 2015, a contribution-based benefit cap (CBBC) on pension benefits for LGERS and TSERS members who retire on or after January 1, 2015, and whose average final compensation (AFC) is $100,000 or higher (adjusted annually for inflation). This legislation was created to control the practice of “pension spiking” in which a member's compensation substantially increases to create a retirement benefit that is significantly greater than the member's contributions would fund. Significant late-career promotions, conversion of benefits into compensation and leave payouts at retirement may also cause a members' retirement benefit to exceed what the member's contributions would fund.

The Anti-Pension Spiking CBBC approach was created to protect each system for current and future retirees and to prevent all employers in the Retirement Systems from absorbing the additional liabilities caused by compensation decisions made by other employers.