Judiciary retirement in PR: ages and percentages

A separate system, with its own statute since 1954

Several public retirement systems coexist in Puerto Rico and people mix them up. The judges' system is among the most distinct: it has its own statute, its own formula and its own exit age, and **the 2017 reform expressly left it out**.

The statute is **Act No. 12 of October 19, 1954, the «Judiciary Retirement Act»**, amended dozens of times since. Its application date, Article 2 itself says, was **July 1, 1954**.

On the reform: **Article 3.1(b)(1) of Act 106-2017** excludes from the New Defined Contribution Plan judges contributing under the Judiciary Retirement System, and says they **shall continue contributing to their system as until now**. **Article 2.6** of that same statute adds that judges' accrued pensions (both those already contributing and new entrants appointed after its effectiveness) **continue to be computed under Act 12 of 1954**, and that their individual contributions remain as they were. Anyone wishing to join the New Plan voluntarily may, but **in addition** to their current contribution they must make the Article 3.4 contribution of Act 106.

A reading caution, because outdated material circulates: the official compilation notes that **Act 7-2021** added an Article 1-A and amended Article 2 of Act 12, and that Act 7-2021 was later **declared void** by Judge Laura T. Swain in *FOMB v. Pierluisi Urrutia*. What follows is the text the compilation treats as in force.

Who is in, and what happens if you go into the Armed Forces

**Article 3** is brief: subject to this statute is any person holding a judicial post on the System's application date, or who holds one from that date onward. Article 2 defines «judge» as any person holding a post as **Justice of the Supreme Court, Judge of the Court of First Instance or of the District Court**.

Participation continues **for as long as the judge is in active service or receives a retirement pension**.

And there is a military provision almost nobody cites, in that same Article 3: participation **continues during any period in which a judge serves in the Armed Forces of the United States while the United States is at war or in a national emergency declared by the President or Congress**, with two conditions. That the official **return as a judge to Government service within ninety (90) days of honorable discharge**, and that they **pay the System the corresponding contributions** for that time, with interest. The contribution is computed **on the salary earned at the date of entry into the Armed Forces**.

Ninety days is a real and short window. Anyone activated who plans to return to the bench should have it written down before discharge, not after.

Two generations of judges, and the date that separates them

Everything else depends on one date: **July 1, 2014**. Before reading any figure, find out which side you fall on.

Whoever **first entered the System on or before June 30, 2014** is governed by Articles 4 and 4-A: a defined-benefit pension, computed on the **highest salary earned as a judge**.

Whoever **first entered on or after July 1, 2014** joins the **Hybrid Program**, defined in Article 2 as **a combined defined-benefit and defined-contribution plan**. Upon retiring they receive an annuity computed under Articles 4-C and 4-D **and**, on the defined-contribution side, another under Articles 10-A and 10-B.

What comes out of the salary: 9.5% or 12%

**Article 10** carries the two figures, and they are among the highest in Puerto Rico's public sector:

• **9.5% of compensation** for the participant who came in earlier, and the contribution **continues for as long as they are in active service, even if they have already accumulated enough credits** for the maximum pension. That detail is in the text and it surprises people: hitting the cap does not free you from contributing.
• **12% of compensation** for any participant first entering **on or after July 1, 2014**, for as long as they are a judge.
• **An additional 0.25%** for participants who entered on or before June 30, 2014, to cover the cost of the benefit of crediting service rendered to the Government in a capacity other than judge (see below).
• The **Government** contributes the amounts that, together with participants' contributions, investment interest and other income, are needed to sustain and administer the System.
• **Discretionary match:** Article 10-A allows the **Office of Court Administration** to contribute, discretionarily and from its appropriations and own income, up to **50% of each Hybrid Program participant's contribution** while they are a judge. Mind the wording: those contributions are deposited **to increase the System's assets and reduce the actuarial deficit**, not described as a match into the individual account.

The formula for those who entered before July 2014

**Article 4** grants a pension to a participant who ceases judicial duties for any cause **except removal involving moral depravity**, subject to three conditions: having reached **age 60 or more**, having **at least 10 years of creditable service**, and **not receiving nor being entitled to receive salary or compensation from the Government** for services in any capacity on the date set for receiving the pension. The pension may not begin before separation nor be retroactive more than thirty days from the filing of the application.

**The formula:** the pension equals **25% of the highest salary earned as a judge**, plus **25/60 of one percent (1%) of that same salary for each month of creditable service in excess of ten years**. The general cap is **60% of the highest salary earned as a judge**. With one historical caveat in the text: participants who qualified to apply for a pension **on or before July 1, 2015** may receive more, but **never above 75%**.

**Deferred pension:** anyone separating before 60, with at least ten credited years and who **has not applied for nor received a refund of contributions**, is entitled to a deferred pension beginning at age 60, or later at their option if they completed between ten and fewer than twenty years of service.

**Actuarial reduction:** anyone who, before turning 60, had **twenty or more credited years** and is granted a pension, receives it **reduced to the actuarial equivalent** of what they would get at 60, **except** participants holding judicial posts **without a fixed term**, to whom that reduction does not apply.

**And the Article 4-A shortcut:** notwithstanding Article 4, a participant who entered on or before June 30, 2014, without having turned 60, who has completed **eight years of service in a judicial post** and has **thirty or more credited years of service**, receives a pension equal to **60% of the highest salary earned as a judge**.

The Hybrid Program: age 65, twelve years and 1.5%

For anyone who first entered on or after July 1, 2014, the figures are different and worth seeing together.

**Average compensation** is no longer the highest salary: Article 4-C computes it on the **average salary of the last five (5) years of service**, and that is the base period.

**The years-of-service annuity** (Article 4-D, subsection A): retirement may be applied for **from age 65**, with a minimum of **twelve (12) years of service as a judge**, and without having applied for or received a refund of accumulated contributions. The amount is **1.5% of average compensation multiplied by the number of years of service as a judge** of the General Court of Justice.

**Early retirement** (subsection B): anyone separating **from age 55 and before 65**, with those same twelve minimum years, is entitled to the subsection A annuity **with an actuarial reduction** computed under the Actuarial Guidelines adopted by the Board of Trustees.

**Deferred annuity** (subsection C): anyone separating before 65 with at least twelve years as a judge and without having withdrawn contributions is entitled to the annuity **upon turning 65**, computed with the same subsection A formula.

And the other half: the Hybrid contribution account

**Article 10-B** governs the defined-contribution side, and it runs on a single threshold: **twelve years**.

**Fewer than twelve contributed years:** upon permanent separation from service (where separation is not by death, removal or total and permanent disability) **the account balance is distributed to the participant**.

**Twelve years or more, and age 65:** entitled to **a lifetime annuity** computed by dividing the accumulated balance of all contributions credited to the account at the retirement date **by a factor** set by the Board with its actuaries, based on actuarial life expectancy and an interest rate. It is the same mechanic the teachers' system uses for its defined contribution account.

Annuities granted under that article are **lifetime, payable monthly**, and **may not be increased, decreased, revoked or repealed**, except where granted in error or expressly provided otherwise.

On deaths, the same article distinguishes two cases: if the participant **dies in active service**, their accumulated contributions **plus investment returns** through the date of death are refunded to whomever they designated by written order before the Administrator, or to their heirs. If they die **already retired**, a lump-sum death benefit is paid consisting of **the excess, if any, of accumulated contributions through the retirement date over the total annuity payments received**. And a fine point: if death occurs **within thirty days of the retirement date**, it is treated as having occurred **in service**.

Mandatory retirement at 70, and what happens if you are short on years

Article 4 says it plainly: **separation from service shall be mandatory for any participant who reaches the age of seventy (70)**. It is not a recommendation nor an administrative policy: it is in the retirement statute.

And if you reach that mandatory age without the ten years of service the statute requires for a pension? The same article resolves it: you are entitled to **receive a refund of the contributions accumulated in your favor, including interest**, or **instead a proportional retirement pension**. That proportional pension **shall equal the proportion your years of service bear to those the law requires** for enjoying a pension.

It is a lifetime decision and must be made with your own numbers: the refund is a one-time amount; the proportional pension is a monthly payment for as long as you live.

The years you worked in government before becoming a judge

Many judges reach the bench after years at the Department of Justice, at an agency or in a municipality. Do those years count? Again it depends on the entry date, and the rule is in the definition of «services» in Article 2.

**For those who entered on or before June 30, 2014:** no credit is given for service rendered to the Government **in any capacity other than judge**, unless **both** conditions are met: **(a)** having rendered **eight (8) years of service as a judge**, and **(b)** the participant **returning to the System the contributions refunded to them by any other retirement system** under which they served, with the interest accrued through the date of the refund. That benefit is what the **additional 0.25%** contribution mentioned in Article 10 funds.

There is an exception inside the exception: **exclusively to qualify for a non-occupational disability pension**, credit is given **at any time** for services rendered to the Government in a capacity other than judge, subject to that same clause.

**For the Hybrid Program** the rule is blunt: for any new participant entering on or after July 1, 2014, «services» means those rendered **from the first day the person is appointed a judge** of the General Court of Justice for the first time, and **no credit is given for any service rendered to the Government in any capacity other than judge**.

A computation detail applying to everyone: services rendered during **any fraction of a month count as one month**, but **no more than one month is credited for all services rendered in any calendar month**. And intervening periods after resignation, separation or expiration of a term, during which the participant was not in Government service, **are excluded**.

If you retire and return: here the rule differs from everyone else's

In the rest of the Puerto Rico government, the general rule is that the pension **is suspended** when a pensioner takes a paid post. In the judiciary, Article 4 gives the pensioner something different: **an option**.

It says that where a pensioner **returns to Government service in any capacity**, they shall have the option of **receiving the salary of the post or continuing to receive Judiciary Retirement System payments**. If they opt for the salary, **at the end of their term pension payments resume at the same rate** received before the return.

And if the return is **to a judicial post**, it changes again: they reacquire participant status and earn credit for post-return service by paying the corresponding contributions on that service and salary. There they may choose between **(1)** repaying all pension payments received, in which case at final separation the pension is recomputed over all service, before and after the return; or **(2)** not repaying them, in which case the suspended pension resumes and **additionally** a **supplemental annuity** is paid for post-return service and average salary, computed with the same retirement annuity formula.