For Tier 5 and 6 members, overtime pay above the annual limit is not pensionable (included in the definition of earnings for the purposes of a member’s pension), and it cannot be used in a final average earnings calculation.
At the beginning of each calendar year, reset the amount of overtime earned by Tier 5 and 6 members to $0.00 in your organization’s payroll system to track year-to-date totals.
Report overtime for your Tier 5 and 6 members using the appropriate earnings code as it is earned.
Keeping Track of Overtime Earnings
New Automatic Capping Feature in Retirement Online
Retirement Online tracks calendar-year totals for overtime reported for Tier 5 and 6 members.
A new, convenient feature will automatically notify you when a Tier 5 or 6 member reaches their overtime limit. You will have access to the new feature depending on when you transitioned to enhanced (submitted your first enhanced report in Retirement Online) and whether you are reporting Employees’ Retirement System (ERS) members or Police and Fire Retirement System (PFRS) members. Each January, when we send an email about overtime limits to reporting contacts, we’ll let you know whether you have access to the new feature.
When Does Automatic Capping Take Effect?
Reporting Overtime for ERS Members in Calendar Year 2024
If you submitted an enhanced report for your December 2023 report or earlier, the new automatic capping feature is in effect immediately for all ERS members you report through enhanced.
If you switch to enhanced in 2024, this feature is not yet available for reporting your ERS members. You’ll have access to the automatic capping feature for ERS members at the start of the next calendar year (January 2025).
Reporting Overtime for PFRS Members in Calendar Year 2024
For PFRS members, the overtime limit is 15 percent of a member’s wages. Retirement Online will calculate the limit based on the member's pensionable, non-overtime earnings from the previous calendar year. Therefore, your organization must report using enhanced for a full calendar year for Retirement Online to calculate your PFRS members’ limits.
If you submitted an enhanced report for your December 2022 report or earlier, the new automatic capping feature is in effect immediately for all PFRS members you report through enhanced.
If you switched to enhanced in January 2023 or later, this feature is not yet available for reporting your PFRS members. You’ll have access to the automatic capping feature for PFRS employees after your organization has used enhanced reporting for one full calendar year.
How Automatic Capping Works
When you submit your regular report, if one of your employees reaches their pensionable overtime limit for the year, Retirement Online will give you a warning message letting you know contributions are no longer required. Retirement Online will calculate how much is owed for that report. Any excess contributions will be viewable on the Improper Withholdings page, and you’ll need to refund the “Excess Amount” back to the employee.
Once you see the message that a Tier 5 or 6 member reached their limit, stop withholding contributions from their overtime earnings for the rest of the calendar year. Report overtime both below and above a member’s overtime limit using the applicable earnings code: regular overtime (OVT), retroactive overtime (ROT), public safety overtime (PEP) or Private Entity Overtime (PEO). Do not use the Non-Pensionable Overtime (NOT) earnings code.
If Automatic Capping is NOT Yet in Effect for Your Organization
It is your responsibility to continue tracking your members’ pensionable overtime earnings and their limits.
Once a Tier 5 or 6 member reaches the limit, stop withholding contributions from their overtime earnings for the rest of the calendar year, and report overtime wages using the applicable non-pensionable overtime earnings code.
ERS Overtime Limits
Tier 6: The limit changes each calendar year based on the increase in the Consumer Price Index for the one-year period ending September 30 of the previous year. (Before January 1, 2018, the overtime cap increased each State fiscal year, April 1 through March 31.)
| Calendar Year | Overtime Limit |
|---|---|
| 2024 | $20,459 |
| 2023 | $19,729 |
| 2022 | $18,233 |
| 2021 | $17,301 |
| 2020 | $17,067 |
| 2019 | $16,779 |
| 2018 | $16,406 |
| Fiscal Year | Overtime Limit |
|---|---|
| 2017* | $12,036 |
| 2016 | $15,608 |
| 2015 | $15,490 |
| 2014 | $15,261 |
| 2013 | $15,000 |
| *Prorated overtime cap for April 1, 2017 through December 31, 2017. | |
Tier 5: The limit increases by 3 percent each calendar year.
| Calendar Year | Overtime Limit |
|---|---|
| 2039 | $35,348.48 |
| 2038 | $34,318.92 |
| 2037 | $33,319.34 |
| 2036 | $32,348.87 |
| 2035 | $31,406.67 |
| 2034 | $30,491.91 |
| 2033 | $29,603.80 |
| 2032 | $28,741.55 |
| 2031 | $27,904.42 |
| 2030 | $27,091.67 |
| 2029 | $26,302.59 |
| 2028 | $25,536.50 |
| 2027 | $24,792.71 |
| 2026 | $24,070.60 |
| 2025 | $23,369.51 |
| 2024 | $22,688.85 |
| 2023 | $22,028.01 |
| 2022 | $21,386.41 |
| 2021 | $20,763.51 |
| 2020 | $20,158.75 |
| 2019 | $19,571.60 |
| 2018 | $19,001.55 |
| 2017 | $18,448.11 |
| 2016 | $17,910.78 |
PFRS Overtime Limits
Tier 5 and 6: The limit is 15 percent of a member’s wages based on the member’s pensionable, non-overtime earnings from the previous calendar year. Those wages include regular earnings, shift differential pay, location pay, longevity payments and top of pay grade bonus.
If You Need Help
If you have questions about reporting overtime, use our help desk form (select “Monthly Employer Reporting” from the dropdown).
Rev. 3/24