MONTGOMERY, AL (WSFA) - Changes are coming to the way retirement benefits are calculated for some public sector employees in Alabama. The Retirement Systems of Alabama confirmed to WSFA 12 News that beginning September 1st, overtime pay will not be factored into benefit calculations. The change was prompted by an opinion from the Attorney's General Office.
State Comptroller Thomas White and State Personnel Director Jackie Graham had asked for the opinion. They sought clarification about overtime pay and whether it is considered "earnable compensation" under state law.
In the opinion, the office found: "Only the salary an individual is normally entitled to receive on a semi-monthly basis is "earnable compensation" as that term is used in section 36-27-1(14) of the Code. Overtime payments are not salary as that term is used in section 36-27-24(b)of the Code, and may not be used for retirement calculation purposes."
The changes applies to all employees who are eligible for overtime and who are covered under the Employees' Retirement System. The system not only covers state employees, but hundreds of employees of local governments across the state.
Lieutenant Scott Swanson has been with the Selma Police Department for 25 years. He wants to retire in the next few years, and thought the overtime pay he's acquired over the years would factor into his state retirement benefits.
"I'm at 25 years, will I be able to live off my retirement, no I won't be able to live off my retirement," Swanson said. "I'll have to find something else to do. But what I look for now, will have to be more of a job than I had anticipated, because my overtime won't be factored into my retirement."
Swanson said he has been told that the change applies moving forward for those vested in the system, but he still has a lot of unanswered questions. The new policy does not apply to those covered by the Teachers' Retirement System, but that could change.