Public employee paycheck deductions in Puerto Rico

The two lines that do not appear on a private paycheck

Much of a public employee's pay stub reads like anyone else's: income tax withholding, Social Security and Medicare. We explain that in our paycheck deductions guide, and it does not change here.

What does change are **two lines specific to public service**, each with its own statute: **the retirement contribution** — a minimum of **8.5%** of your monthly pay, with a different rule for the Police rank system — and **the AEELA deduction**, which is **3%** of salary.

Knowing where each comes from is practical: you can tell when a deduction is right, when you can raise or lower it, and what happens if your agency deducts it but does not remit it.

The 8.5% retirement contribution, and the Police rank system's 2.3%

**Article 3.4 of Act 106-2017** says it plainly: **every Participant in the Retirement Systems must mandatorily contribute to their Defined Contribution Account a minimum of eight point five percent (8.5%) of their monthly pay**, up to the cap the Code sets.

Two nuances almost nobody uses. First, **you may voluntarily contribute additional amounts**, as the Code allows. Second, **you may vary the percentage from time to time**, with one clear limit: **never below the statutory minimum**.

Then comes the exception that changes thousands of paychecks: **for members of the rank system of the Puerto Rico Police Bureau, the mandatory contribution is two point three percent (2.3%)** of monthly pay.

That exception carries its own rule, best read alongside the retirement age: for rank-system members **with fewer than ten (10) years left before mandatory retirement** under Act 447 of 1951, **the reduction applies optionally** once they state they wish to take it **within the term provided**. That is: it is not automatic — you have to say so, and say it in time.

If you want the full picture of the plan — what the Defined Contribution Account is and what happened to the earlier systems — it is in our Plan 106 guide and the one on moving from the old system to the new.

AEELA's 3%: where that deduction comes from

The AEELA line has a name and an article: **Article 11 of Act 9-2013**. It provides that **the directors or heads of government entities — and the directors of the retirement systems, for pensioner members who so authorize — shall monthly deduct three percent (3%), or the percentage in force when they joined the Association, from total salary or pension**, for savings purposes.

That money does not stay with the agency: **the income from this concept shall be separated and remitted to the Association by the Secretary of the Treasury**, and **constitutes AEELA's Savings and Loan Fund**. That is, it is not a fee that evaporates: it is your savings, and the basis of the Association's loans and benefits.

You can move it up: **any employee or pensioner member who wishes may authorize a deduction greater than 3%**. And you can go back, but with a written time condition: **the increased deduction may be lowered at the employee's request after one (1) year** from requesting the increase, **to a rate no lower than 3%**.

And the excess already saved? The law contemplates it: **someone who contributed above 3% and later needs to withdraw that excess may do so, provided it is not encumbered by a loan**.

Who can stay out, and who joins by choice

The same Article 11 names a group of officials who **may notify the Executive Director of their intention not to join or to withdraw** from the Association: **members of the Legislative Assembly**, the **Comptroller**, the **Citizen's Advocate**, the **Capitol Superintendent**, the **Director of the Legislative Services Office** and **Mayors**. And it adds that **at any time they may join or rejoin individually**, by written request to the Executive Director.

On the other side are those who do **not** have the mandatory deduction but **may join by choice**: employees of **public corporations that before June 24, 1965 were not subject to the mandatory deduction**, those of **any public corporation created after that date** or in the future, and **employees of Puerto Rico's municipalities**. They **may join individually**, per what the Assembly of Delegates provides by regulation.

That is why two people who both work “for the government” can have different stubs: **it depends on the entity**, and in some cases on a personal decision to join.

Those savings are locked — with two written exceptions

**Article 24** surprises anyone who thinks of that money as a bank account. Except as provided in Article 11, **employees contributing to the Savings and Loan Fund may not dispose of the amounts deducted**, with two exceptions: **definitively ceasing in their position or job**, or **needing the funds to treat a catastrophic illness** endangering the member's life or that of someone in their household — and then **only if they are not pledged as security for debts with the Association**.

There is also a rule for those retiring: **an employee who leaves their job to take a pension from any of the Retirement Systems may keep contributing to the Fund without interruption, if they authorize it before retiring** — in which case **they may not dispose of the savings and dividends accumulated** as of the effective date of their resignation.

And if the person dies, **the savings are paid to their legal heirs**, with a note worth knowing: **processing those files and issuing certifications is free of all kinds of fees**.

The detail of the catastrophic illness exception — requirements and process — we cover separately in the guide on withdrawing AEELA savings for catastrophic illness.

They deducted it and did not remit it: who answers

This is the part almost nobody knows exists, and it protects your savings. **Article 11-A** requires **every government entity to deduct and withhold from the member's salary or pension** the savings contributions, loan amortization installments and insurance premiums, **and to remit them to the Association within twenty (20) business days after the end of the month** in which the withholding was made.

And it sets responsibility unambiguously: **the entity required to deduct, withhold and remit shall be liable to the Association for the full payment of the corresponding amounts**. If it fails to withhold or to remit, **the sums it should have withheld and paid are collected from the entity**, following the procedure the Association establishes.

And if it is merely late: **an entity that does not remit within the term is liable for interest at the legal rate**, from the day the amounts should have been remitted until the day of payment.

Translated to your case: if your stub shows the deduction but your Association account does not reflect it, **the problem is not yours to fix** — the statute puts that burden on the government entity.

What to check on your stub this month

**One:** that the retirement line is **at least 8.5%** of your monthly pay — or **2.3%** if you are in the Police rank system. If you contribute more by choice, that is your voluntary contribution and you can adjust it, never below the minimum.

**Two:** that the AEELA line is **3%** of salary, or the percentage in force when you joined the Association. If you authorized a larger deduction and want to lower it, remember the **one-year** wait from when you requested the increase, and the 3% floor.

**Three:** if you are in the Police rank system with **fewer than ten years** to mandatory retirement, check whether the optional contribution reduction suits you — and if it does, **say so within the term**, because it is not automatic.

**Four:** compare your stub with your Association account statement now and then. If the deduction appears on one and not the other, that is where Article 11-A comes in.

The dates of what we cite, because in these matters the version governs: **Act 9-2013** in the OGP compilation **revised October 25, 2024**, and **Act 106-2017** in the **April 15, 2024 revision**. Before claiming a figure, confirm it is still in force.