Among CalPERS safety members, “the 10s and 18s” is shorthand for the Government Code sections in the 21400 range that govern industrial disability retirement. The “10s” are the sections that set the benefit floor: 50% of final compensation for most safety members under Sections 21411, 21413, and 21407, and 60% under Section 21410 for certain state bargaining units. The “18s” points to Section 21418, which describes how that allowance is funded from accumulated member and employer contributions. Understanding the CalPERS 10s and 18s for industrial disability retirement matters because those sections determine the monthly floor you can count on after a career-ending on-duty injury, and because widespread misconceptions about the “18s” lead members to expect benefits the statute does not actually provide.
What the “10s” Actually Pay
The core benefit is a disability retirement allowance equal to 50% of final compensation. Several Government Code sections establish that same floor for different member categories. Section 21411 covers state safety members, Section 21413 covers local safety members, and Section 21407 covers state peace officer/firefighter members.1Justia. California Code Government Code 21404-21432 – Disability Retirement Benefits The language across these sections is nearly identical: you receive 50% of final compensation, plus an annuity purchased with any accumulated additional contributions.
Each of these sections carries an important backup provision. If you have enough service credit to qualify for a regular service retirement, and that service retirement allowance would be higher than the 50% disability floor, you receive the service retirement amount instead.1Justia. California Code Government Code 21404-21432 – Disability Retirement Benefits This matters most for members injured late in their careers. A safety member with 25 years of service under a 3-percent-at-50 formula could have a service retirement allowance of 75%, well above the 50% disability minimum. CalPERS calculates both figures and pays the higher one.
Section 21410 and the 60 Percent Rate
Section 21410 itself provides a higher benefit than the standard 50%. It grants a disability retirement allowance of 60% of final compensation for state members in bargaining units subject to Government Code Section 21159 who became subject to that section on or after January 1, 1993. The section explicitly overrides the 50% figures in Sections 21406 through 21411.2California Legislative Information. California Code Government Code GOV 21410 As with the 50% sections, if your service retirement allowance would be greater, you receive the service retirement amount instead.
Not every safety member qualifies for the 60% rate. It applies only to state members in specific bargaining units, so local safety members generally fall under the 50% sections. The practical difference between 50% and 60% of final compensation can amount to thousands of dollars annually, so confirming which section governs your membership category with CalPERS is worth the phone call.
What Section 21418 Actually Does
Section 21418 does not set a separate percentage. It describes the funding mechanism, specifying that the disability retirement allowance is “derived from accumulated normal contributions and the contributions of the employer.”3California Legislative Information. California Code Government Code 21418 – Disability Retirement Allowance Where the “10s” set the dollar floor, the “18s” describes where the money comes from.
A common misconception among safety members is that Section 21418 independently grants a 75% or 90% benefit. The statute text does not contain those percentages. Higher allowances do exist for some members, but they come from the service retirement comparison built into sections like 21411 and 21413, where a long-tenured member’s service retirement formula produces an allowance above 50%. That higher figure is what gets paid, and it flows through the contribution-based mechanism Section 21418 describes.
Who Qualifies
To draw on either the “10s” or the “18s,” you must hold a safety classification within CalPERS. State safety members are those involved in law enforcement, fire suppression, and the protection of public safety; local safety members fill similar roles for public agencies or special districts that contract with CalPERS.4California Public Employees’ Retirement System. New to CalPERS The injury or illness must be industrial, meaning it arose out of or during the course of your employment. Under Government Code Section 21151, any safety member incapacitated for the performance of duty because of an industrial disability must be retired for disability, regardless of age or years of service.5Justia. California Code 21150-21176 – Disability Retirement
The legal standard is a “substantial inability” to perform the usual and customary duties of your specific position. Difficulty with certain tasks is not enough. Courts have held that the disability must be an actual, present inability to perform your essential job functions, not a future risk or a doctor’s precautionary restriction.6CalPERS. Circular Letter – Industrial Disability Retirement Policy A medical professional documents the functional limitations, and the employer certifies the industrial nature of the injury based on workers’ compensation files and incident reports.
How Final Compensation Drives the Number
The percentage in the “10s” is only half the equation. It gets applied to your “final compensation,” which CalPERS defines as your highest average annual pay during a consecutive period of employment. For most safety members hired before January 1, 2013, that period is the highest 12 months. Members subject to the California Public Employees’ Pension Reform Act of 2013 generally use a 36-month average. Some contracting agencies have negotiated specific terms that may differ, so your employer’s CalPERS contract controls which calculation applies.
Final compensation includes regular pay and certain special pay items but typically excludes overtime. Because your disability allowance is a percentage of this figure, the difference between a 12-month and 36-month averaging period can meaningfully change the monthly benefit, particularly if your pay climbed sharply in your last years of service.
Tax Treatment
Industrial disability retirement payments receive favorable tax treatment under Internal Revenue Code Section 104(a)(1), which excludes from gross income amounts received under workers’ compensation acts as compensation for personal injuries or sickness.7Office of the Law Revision Counsel. 26 U.S. Code 104 – Compensation for Injuries or Sickness The IRS treats CalPERS industrial disability payments as made under a statute “in the nature of a workers’ compensation act,” making the disability portion exempt from federal and state income tax.
The operative phrase is “disability portion.” Under IRS Revenue Ruling 85-105, if you qualify for both a disability retirement and a service retirement and the statute lets you take the higher amount, only the portion attributable to the disability provision is tax-exempt. Any excess that exists because of your years of service is taxable. For a member receiving exactly 50% under the disability sections, the entire amount is typically tax-free. For a member whose service retirement exceeds 50% and who receives the higher figure, 50% of final compensation is sheltered and the remainder is taxed as pension income.
Reading Your 1099-R
CalPERS reports disability retirement payments on IRS Form 1099-R using distribution code 3 in Box 7, which signals a disability distribution. If the entire payment is tax-exempt, Box 2a (taxable amount) should show zero. If part of the payment is taxable because it exceeds the disability floor, Box 2a will reflect the taxable portion.8Internal Revenue Service. 2023 Form 1099-R Reporting of Disability Annuity Payments to First Responders and Other Disabled Taxpayers Errors in Box 2a are not uncommon and can trigger an IRS notice if the amount on your return does not match what CalPERS reported, so check the form carefully each year.
Filing the Application
The process begins with a Disability Retirement Election Application, which either you or someone on your behalf (including your employer) can file with CalPERS. A Physician’s Report on Disability must accompany the application, detailing your specific functional limitations and the medical basis for why you cannot perform your job duties.9CalPERS. A Guide to Completing Your CalPERS Disability Retirement Election Application Supporting documentation should include diagnostic imaging, specialist evaluations, and treatment records, and it needs to line up with the employer’s incident reports and workers’ compensation files.
Your employer certifies that the disability is industrial in nature, reviewing internal records to confirm the injury occurred on the job and submitting its own documentation to CalPERS. Once CalPERS has all required information, review can generally be completed within about three months, though cases requiring additional medical evidence or employer follow-up take longer.10California Public Employees’ Retirement System. Service and Disability Retirement If approved, you receive a formal notification with your effective retirement date and monthly allowance amount, and your first payment typically follows within four to six weeks.
If Your Application Is Denied
A denial is not the end. CalPERS provides a formal administrative hearing process governed by the Office of Administrative Hearings. It begins when CalPERS sets a hearing date and drafts a Statement of Issues outlining its position. Several weeks before the hearing, you receive the Statement of Issues, a Notice of Hearing, and materials about evidence discovery.11CalPERS. General Procedures for Administrative Hearings
At the hearing, you carry the burden of proof. You present evidence first, call witnesses, and respond to CalPERS’s case. The administrative law judge has 30 days after the case is submitted to write a proposed decision, and you receive a copy within 30 days after that. The CalPERS board then votes to adopt the proposed decision, remand the case for more evidence, or reject it entirely. If the board rejects the proposed decision, a full board hearing follows.11CalPERS. General Procedures for Administrative Hearings
If you disagree with the board’s final decision, you can petition CalPERS for reconsideration or appeal to the California Superior Court. The appeal window is generally 30 days after the decision is adopted. Missing it makes the decision final.