From the old system to Plan 106: what happened to mine

What happened, in one sentence

If you started working for the Puerto Rico government before 2017, your retirement is split into two pieces and it is worth knowing which is which, because different statutes govern them.

**The old piece was frozen.** Article 2.4(c) of Act 106-2017 says it bluntly: from the moment that statute took effect, **the participant shall accrue no additional benefits, whether for years of service, compensation or any other reason, in the Retirement Systems**.

**The new piece started from zero.** From that same date, what you contribute goes into an individual account of the New Defined Contribution Plan, what nearly everyone calls «Plan 106».

It is not that they took away what you accrued: it is that it stopped growing. Understanding that difference completely changes how you plan a retirement that began under Act 447 of 1951, under Act 1 of 1990 or under System 2000.

What you do keep, and who guarantees it

That same Article 2.4 opens with the part that reassures many people. Subsection **(a)** provides that upon the statute taking effect **the benefits of Accrued Pensions shall be preserved and guaranteed by the Government** for participants who began working before that date.

Subsection **(b)** adds the case of someone already eligible to leave: participants who at the time the statute took effect **were entitled to retire and receive some pension or annuity** under their respective systems' provisions **may retire on any later date** and shall receive the corresponding Accrued Pension, **computed under the provisions applicable to their system up to the moment the statute took effect**, on the terms contemplated there.

Note the words «up to the moment it took effect». That is the cut. An employee who in 2017 had twenty years of service and today has twenty-eight **collects an Accrued Pension as if they had twenty**, plus whatever is in their Plan 106 account for the remaining eight. It is not the same as the old formula applied to the whole career, and that is where most people get their surprise.

The four doors that closed on July 1, 2017

The rest of Article 2.4 is a list of things that **can no longer be done**, and it is the part to read before going to the Retirement Board with an idea that may no longer exist:

• **No additional benefits accrue** in the old systems, for any reason, not years of service, not compensation (subsection c).
• **No recognition of non-contributed service** after the statute's effective date (subsection c). If you planned to buy non-contributed time after that date, that door closed.
• **Contributions may not be transferred or returned** for periods worked on or before the statute's effective date (subsection c).
• **Since July 1, 2017 the participant makes no individual contributions or payments** to the Accrued Pensions Account, nor additional contributions to their Retirement Systems (subsection d). What is withheld since then goes to Plan 106.
• On the employer side, subsection **(e)** provides that from that same date the Government, public corporations, municipalities and the Legislative and Judicial branches **are not required to make employer contributions** (including the Uniform Additional Contribution and the Magisterial Justice Uniform Contribution) but **are required to satisfy the applicable «Pay-Go» charge**. That is the scheme under which accrued pensions are paid today.

The one transfer the statute did leave open

In the middle of that list of closed doors, subsection (c) itself leaves one open, and it is the one that matters to anyone who moved between systems.

It says that **employees who have contributed or are actively contributing to another retirement system not covered by this Act may request the transfer of contributions to their system of origin, or to the one they will be entitled to at the time of retirement**.

With a condition that must be stated in full and not in passing: **«provided fiscal resources permit, in accordance with the Certified Fiscal Plan»**. It is not an unconditional right; it is tied to fiscal availability.

Which are those «systems not covered»? The statute clarifies it in Article 1.6: Act 106 applies to the **Government Employees Retirement System** and the **Teachers' Retirement System**; and to the **Judiciary Retirement System** only the Chapter 2 provisions establishing «Pay as you Go» apply, excepting Article 2.6.

If you moved between central government and the judiciary, or between government and teaching, that sentence is what you should take in writing to both systems before deciding anything.

The registry the statute ordered created, and that you can request

This is the actionable part, and the one almost nobody uses. **Article 2.2** ordered the **creation and maintenance of a registry of every participant, beneficiary and pensioner** reflecting **in detail** the amounts owed to each as an Accrued Pension under their system **up to the date the statute took effect**.

And it details what it must contain, «without this being understood as a limitation»: **the accrued benefit the participant is entitled to, the employment history and the contributions made**, according to **each applicable retirement law under which they contributed**. That last phrase matters if your career passed through more than one statute: the registry must reflect each.

The article itself says what it is for: **payments of Accrued Pensions are issued according to what the registry contains**. That document is the basis of your check.

One detail that avoids confusion: the article clarifies that **for judges in the Judiciary Retirement System and for teachers contributing under Act 91-2004, the registry is made for informational purposes**, because those groups **continue contributing under their respective systems** as they did before the statute.

If you have never seen your registry, request it in writing from the Retirement Board. It is the document that tells you, in numbers, what was frozen.

Payment terms were also anchored to 2017

Not only the amount was frozen: the rules for how it is paid were too. **Article 2.3** provides that the payment terms of each participant's, beneficiary's or pensioner's Accrued Pension **shall be computed under the terms set in the statutes of their respective Retirement Systems at the moment this Act takes effect**.

And it extends further than people assume: **disability pensions, death benefit payments, payments to beneficiaries, refunds of contributions and any amount owed or benefit of similar nature** are also computed under the statutes in force at that moment.

And a transition provision that was worth a great deal to anyone mid-process: employees who **at the time the statute was approved were processing an application for disability benefits or any other benefit** could **conclude that process under the law applicable when it began**.

If you change agencies today: what moves and what does not

With all of the above in hand, the practical question answers itself, but it is worth saying out loud because a lot of hallway confusion circulates.

Moving from one agency to another **within** the employers covered by the Government Employees Retirement System does not take you out of Plan 106 nor reopen the old system: your **Accrued Pension stays frozen** at the 2017 cut and your **Defined Contribution Account stays the same**. You change employers, not plans.

What does change the picture is moving **between systems**, into teaching, into the judiciary, or the reverse. There the Article 2.4(c) transfer exception and each system's own rules come into play, and those differ from one another. The teacher retirement guide and the judiciary guide explain each on its own terms.

Before accepting the transfer, request **in writing** (from the Retirement Board and, if applicable, from the other system) these five things:

• **My Accrued Pension registry** under Article 2.2, with the accrued benefit, employment history and contributions, for each retirement law under which I contributed.
• **The current balance of my Plan 106 Defined Contribution Account.**
• **Whether the employer I am moving to is an employer covered** by the same system, or whether the transfer moves me between systems.
• **Whether my case qualifies for the Article 2.4(c) transfer of contributions** and what happens with the Certified Fiscal Plan's fiscal-resources condition.
• **What happens to any open process** (disability, refund, pending benefit) when changing employers.