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 to the member or their designated beneficiary detailing the final compensation that will be used for calculating retirement benefits. Members have 60 days to request a recalculation of their final compensation based on their average annual compensation over any three calendar years of service, which may provide a larger benefit. If a recalculation request is made, the Division must respond within 30 days with a second notice detailing the recalculated final compensation. Members then have 30 days to approve this recalculated amount; if they do not, the original final compensation will be used.

Additionally, the bill allows members who retired after January 1, 2025, and began receiving benefits before the bill's effective date, to initiate the recalculation process within one year of the bill's enactment. However, any adjustments to retirement benefits will only apply to 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 tasked with creating necessary rules and regulations to implement these provisions.