Act 106 and Plan 106: how your retirement works in the Puerto Rico government

Why I am writing this

I worked for the Government of Puerto Rico, and in all that time nobody sat me down to explain how my retirement worked. I saw the deduction on the pay stub and that was it. What I know I learned later, reading Act 106-2017 and asking. This guide is what I wish someone had told me on day one.

First, in one sentence: under Act 106, your retirement is not a pension. It is an account with your name on it, which grows with what you put in and with whatever the investment returns. Nothing else. If you understand that, you understand everything that follows.

How much comes out of your paycheck: 8.5%

Article 3.4 of Act 106-2017 says it plainly: every participant must contribute a mandatory minimum of 8.5% of monthly pay to their Defined Contribution Account. That is the number almost nobody finds when they look for it, and it is the one that decides your retirement. Look at your pay stub: it is there, every month.

There is one exception written into the law itself: members of the Police rank system contribute 2.3%. And for officers with fewer than ten years left before mandatory retirement under Act 447 of 1951, that reduction is optional; they have to ask for it. Further down I tell you why I would think twice.

And since March 15, 2022, when the debt Plan of Adjustment took effect, teachers and judges also moved into Plan 106. Those who were under 45 that day, or were hired later, contribute 2.3% to the plan plus 6.2% to Social Security; those 45 or older contribute 8.5%, unless they chose the 2.3% with Social Security.

The 8.5% is a floor, not a ceiling. The law lets you contribute more voluntarily, up to what the Puerto Rico Internal Revenue Code allows. And since, as a rule, the government does not match a single cent (I explain the exception for some police officers below), that voluntary contribution is the only lever you have to make the account grow faster.

Why it is an account and not a pension

For decades the Puerto Rico government paid defined-benefit pensions, under Act 447 and Act 1: you worked the years and a formula told you what you would collect for life. Those systems ran out of money. Act 106-2017 restructured everything: what was already accrued keeps being paid from the General Fund, the scheme they call PayGo, and new accrual moved into individual accounts.

The practical translation is harsh, but it is the truth: if you join the Puerto Rico government today, nobody promises you a monthly amount. You have an account that grows with your 8.5% and with investment returns, and what comes out of it is what there will be. That is why the right question is not "when can I retire?" but "how much have I accumulated and how much more can I put in?".

The first thing I would do: activate the account

Plan 106 accounts are administered by Alight Solutions, not by the Retirement Board directly. Your account exists from the moment you started contributing, but it stays inactive until you activate it yourself at digital.alight.com/plan106 with the temporary password mailed to you. If you never saw it or lost it, that same page has the option to recover your user ID and password. You can also call 1-844-PLAN106 (1-844-752-6106). In September 2026 the Financial Oversight Board approved extending Alight's contract to September 2033, with optional paid financial advice and a new local service number; if the number changes, the current one is on the portal.

That portal is where you see the balance, choose your investment funds and name beneficiaries. If you never picked a fund, the law provides that the money stays automatically in an alternative that guarantees the full amount of your contributions, preserving the principal. It is the conservative default, and I know plenty of people who have been sitting there for years without knowing it, because they never logged into the portal.

One detail that works in your favor: basic management fees are paid by the Government of Puerto Rico, not by your account. And the law requires that you be given a report of your account activity at least once a year, on paper or through the portal. If you have gone years without seeing one, ask for it. It is your money.

Loans against your account

Yes, you can borrow against your own balance, and the terms are published by the Retirement Board. It is not a loan from the Retirement System: the money comes out of your account and goes back into your account, interest included. These are the terms:

• How much: up to 30% of your account balance on the application date, capped at $10,000. The minimum is $500.
• Interest: the prime rate published in The Wall Street Journal on the 15th of the prior month, plus 1%. It is set on the first day of the month and fixed when you apply.
• Where the interest goes: into your own account. You are the only one who benefits from the interest you pay.
• Term: minimum 6 months, maximum 60 months.
• How many: only one active loan at a time. It does not renew annually.
• How you repay: monthly direct debit from your checking or savings account. There is no payroll deduction through your employer.
• Who qualifies: active participants with sufficient balance and an already-activated account on the portal.
• There are no mortgage loans for buying a primary residence under this plan.

My advice on the loan

Since the interest goes back into your account, a Plan 106 loan is not throwing money away, and for an emergency it beats a credit card. But watch two things. One: while the money is out, it is not invested in the fund. Two: if you stop paying, the amount you owe is imputed to you as income and taxed on your next return, and you cannot take another loan until you settle it.

In other words, what started as a loan to yourself ends up as a bill from Hacienda. I would use it for what cannot be postponed, with the direct debit set up from day one so I never miss a payment.

If you resign or leave government

Article 3.8 gives you three paths when you separate from public service, and none of them means losing what you contributed: you can leave the account where it is inside the Plan, transfer it to a defined-contribution plan qualified under Section 1081.01(a) of the Code, or request a disbursement of the balance. The disbursement pays whatever taxes apply when you take it out, so the fast option is almost always the most expensive one.

I left the Government of Puerto Rico myself, and this is what I learned: the account is not lost when you leave. The balances are yours with the full weight of the law. Article 3.6 says you have ownership rights over your account, and Article 3.3 adds that contributions are not subject to tax or garnishment, and are exempt from creditors' claims, with one important exception: debts you owe to the Retirement Systems, to your employer and to the Government.

And if you die, the available balance is disbursed to the beneficiaries you designated in writing; if you never named anyone, it goes to your heirs with a declaration of heirs or a will. Naming a beneficiary takes five minutes on the portal and saves your family months of paperwork. Do it today.

If you are a police officer: the 2.3% and a warning

The law sets 2.3% for the Police rank system, instead of 8.5%. But less does not come out of your check: since January 2020 (Act 71-2019) police officers also pay 6.2% into Social Security, so the total deduction is still 8.5%. What changed is where it goes: only the 2.3% reaches Plan 106, and the rest earns you Social Security credits. Remember what Plan 106 is: an account that only grows with what goes into it.

There is one exception to "nobody matches you": about 5,600 police officers who came from Act 447 and Act 1 receive government deposits into their Plan 106 accounts under the Retirement Board's Enhanced Retirement Plan (Plan de Retiro Mejorado; the fourth deposit was in June 2025). And Act 146-2026, signed in July 2026, allows surpluses from the Police retirement trust to fund additional contributions. If you joined the Police later, the Enhanced Retirement Plan most likely does not apply to you; confirm with Retiro.

That is why, if you are a police officer, the voluntary contribution matters more for you than for anyone. And if you are in the group with fewer than ten years to mandatory retirement and they offer to drop you to 2.3%, run the numbers before accepting. Under the new salary scale, an Agente's base pay is $3,612.84 a month: 8.5% is about $307 a month into your account, and 2.3% about $83.

If you worked in government before 2017

What you accrued under the previous systems until the freeze was not erased: it is paid at retirement under the PayGo scheme that Act 106 itself guarantees. What changed is that since the restructuring, your new accrual happens in the defined-contribution account, not in the old formula.

If you are in that mixed group, your retirement will have two sources with different rules, and it is worth asking the Retirement Board for an estimate of both parts early, not the year you plan to leave. For teachers and judges the cut was not in 2017 but on March 15, 2022, when the Plan of Adjustment took effect: that day their systems were frozen and their new accrual moved into Plan 106. For your individual case, Retiro is the only source that can give you your real number: servicioretiro@retiro.pr.gov or 787-777-1414. The cut from the old system to Plan 106 is explained separately, in its own guide.

What I would do today

None of this takes more than an afternoon, and it is the difference between reaching retirement knowing what you have or reaching it blind:

• Activate the account at digital.alight.com/plan106. If you do not have the password, recover it right there or call 1-844-PLAN106.
• Check which fund your money is in. If you never chose, it is in the guaranteed default; decide whether that is what you want.
• Name a beneficiary. Five minutes, and you spare your family a declaration of heirs.
• Find the 8.5% (or the 2.3%) on your pay stub and confirm it matches your salary.
• If you can, set up a voluntary contribution, even a small one. It is the only way the account grows faster, because nobody matches you.
• If you have years from before 2017, ask the Retirement Board for an estimate of both parts now.