This bill establishes an alternate calculation method for retirement benefits for members of the Teachers Pension and Annuity Fund (TPAF) and the Public Employees Retirement System (PERS). Upon receiving a completed retirement application, the Division of Pensions and Benefits is required to send a notice detailing the final compensation that will be used for calculating retirement benefits. Members or their designated beneficiaries have 60 days to request a recalculation based on the average annual compensation from any three calendar years of service that would yield the largest benefit. The Division must then provide a second notice with the recalculated final compensation within 30 days, and the member or beneficiary has an additional 30 days to approve this recalculation.

Furthermore, the bill stipulates that members who retired after January 1, 2025, and began receiving benefits before the bill's effective date will have one year to initiate the recalculation process. Any approved recalculations will only affect benefit payments made after the bill's effective date, and no retroactive payments will be granted based on the recalculated benefits. The director of the Division of Pensions and Benefits is also tasked with creating necessary rules and regulations to implement these provisions.