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Retirement Plans/Issues April 25, 2014

Retirement Plans/Issues April 25, 2014. Agenda. Which Retirement System Are You? Defined Benefit vs Defined Contribution STRS Contributions Qualifications Election Process Reporting to STRS Compensation Creditable/Non Creditable. Agenda. Penalties Service Credit

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Retirement Plans/Issues April 25, 2014

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  1. Retirement Plans/IssuesApril 25, 2014

  2. Agenda • Which Retirement System Are You? • Defined Benefit vs Defined Contribution • STRS • Contributions • Qualifications • Election Process • Reporting to STRS • Compensation • Creditable/Non Creditable

  3. Agenda • Penalties • Service Credit • Furlough Implications • Retirees • PERS • Contribution • Qualifications • Exclusions

  4. Agenda • Compensation • Special Compensation • Non-Reportable • Overtime • Service Credit • Furlough Implications • Election Process • Retirees • OASDI/Medicare Qualification • Questions

  5. Agenda • Next “Concept” Classes • Beginning Fall of 2014 • Salary Computation • Payroll Deductions/Withholdings • Paying Employees • Employee Leaves/Benefits • Retirement Systems • Open Labs after Each Concept Class

  6. Which Retirement System? • Based on Position not the Person • STRS: • Requires Credential, Permit or Certificate • Teachers, Administrators, Nurses, Psychologist • PERS: • Non-Credential, Meets PERS Qualification • Bus Drivers, Office Staff, Instructional Aides • Director of Human Resources, Chief Financial Officer • See Circular in Concepts Docs for Examples

  7. Which Retirement System? • Alternate Retirement/Social Security • Does Not Meet STRS or PERS Requirements • Part Time Employees - Less Than 20 Hours • Dual Retirement • Member in One System, Non-member in the Other, or Member in both • Working in both Classified and Certificate must have 2 Escape retirement tabs • Special Requirements

  8. Defined Benefit vs Defined Contribution • Defined Benefits Plans: • STRS/PERS • Promised Benefit Based on the Following Factors: • Age • Years of Service • Highest Final Compensation Pay

  9. Defined Benefit vs Defined Contribution • Defined Contribution Plans: • 457B/403B • Employee Contributions and Interest • Employer Can Participate

  10. STRS - Contributions • California State Teachers Retirement System (STRS) • Common name CalSTRS or STRS • Employee Contributions Currently 8% • Requires Legislation to Change • Employer Contribution Currently 8.25% • Reduced Workload Currently 10.276% for Employer

  11. STRS - Qualifications (See Retirement Qualification Rules) • Full Time • Immediately with Full Time 100% Contract • Part-time • 50% - 99% • Month following or • STRS Permissive Election (Form ES 350) from day one - Election can be made at anytime

  12. STRS Retirement Qualification Rules

  13. STRS - Qualifications • Substitute - Long Term/Daily/Hourly • 100 Days/600 Hours • With a Single District • 1st of the Following Month • During Same FY • Escape Report Retire01

  14. STRS - Qualifications • Less Than 50% of Contract/Daily/Hourly • After 60 Hours/10 Days • 1st of Following Month, unless the following pay period is in the new FY • With a Single District • Escape Report Retire02 • Funds on Deposit From Previous STRS Employment • Compulsory Membership Regardless of the Type of Employment Less Than Half Time

  15. STRS - Election • CalSTRS Audits Election Procedures • Permissive Election • Form ES 350 for Election • Form is Irrevocable • All Future Certificated Work is STRS • No Earlier than 1st Day of Pay Period in which Form is Signed • Forward Form to County Office • New – Need Employee 99 (Used to be NOPA)

  16. STRS - Election (See Join CalSTRS? Join CalPERS?) • CalSTRS Member in PERS Qualifying Classified Position • 60 Days to Elect to Stay in STRS • New ES-372 Form for Election • CalPERS Member in STRS Qualifying Certificated Position • 60 Days to Elect to Stay in PERS • New ES-372 Form for Election

  17. STRS - Election • Required to Ensure Employees have been Given the Election Form • Recommended that Districts Retain Written Acknowledgement(ES-373): • Employees Advised Concerning Form • Employees Given Form-372 • Forward Form-372 to County Office for Review (See Various Certificated Retirement Scenarios)

  18. STRS - Reporting • Issues: • Assignments Coding • Are They Reporting Correctly • Daily or Hourly • Special Compensation • Pension Spiking • Enhancing Member’s Benefits • Watch Contract Language • Requires Backup to County Offices

  19. STRS - Reporting • For “New” Members • Only Creditable Special Compensation is Longevity (See “T -chart”) • Reported with Code “72” • SEW • Secure Employer Web Site (SEW) • To Check Retirement Status: • https://sew.calstrs.com/CalSTRSSewWebUI/ Registration/Pages/Register.aspx

  20. STRS – Compensation (See CalSTRS Directive 2014-01) • Creditable: Ed Code 22119.5, 22119.2 and 22119.3 (PEPRA has been added) • Contributions on Service in Excess of One Year: • Creditable to the Defined Benefit Supplemental (DBS) Program • Not Used in the Calculation for Final Compensation Purposes

  21. CalSTRS Directive 2014-01 p.1 (See Handout)

  22. STRS – Compensation (See Employers’ Creditable Compensation Guide for existing members) • STRS Creditable Compensation Guide • Lists What Types of Compensation • To Creditable Service • To Defined Benefit Program (DBS)

  23. STRS – Compensation • Non Creditable: • Position is Not Eligible for State Apportionment • Position Does Not Require Credential, Certificate or Permit • Position Does Not Meet Community College Standards • Walk On Coaches are an example • Walk On vs Contract (does not have a STRS position with the Disrtict)

  24. STRS – Compensation • Compensation Cap for CalSTRS 2% at 62-Employee Portion Only • Cap on Compensation is Equal to 120% of the 2013 Social Security Wage Base • Will be Adjusted Annually Based on Changes to the Consumer Price Index for All Urban Consumers • Beginning July 1, 2013, the Compensation Cap for CalSTRS 2% at 62 is $136,440

  25. STRS – Service Credit STRS Service Credit Calculation: Pay CodeService Credit Formula 0 Earnings divided by Pay Rate 1 Earnings divided by Pay Rate divided by 12 2 Earnings divided by Pay Rate divided by 11 3 Earnings divided by Pay Rate divided by 10 Examples: Pay Rate Cd Earnings Service Credit 32,445.84 0 99.68 0.0030 *2,187.50 3 1,093.75 0.0500 *1,093.75/2,187.50 = .5 then divided by 10 = .0500

  26. STRS – Service Credit • Certificated Mandatory Furlough • Preserve Pay Rate • Reduces Service Credit • Preserve Service Credit • Change Calendars • Change Salary Schedules • Do Not Choose as Final Compensation Year • For K-12, Reduction Cannot Result in Less than: • 175 Days for Teachers • 190 Days for Program Managers, Principals, Administrators

  27. STRS – Retirees • CalSTRS Retirees can Work: • Earnings Limitations • FY13/14 = $39,903 • FY14/15 = $40,173 • After January 1, 2013, must wait 180 days before returning to work with a CalSTRSemployer • Will reduce their retirement benefit dollar for dollar by an amount equal to their earnings • Can Work as Classified Instructional Aide Only (Ed Code 45134) • Watch Payroll Reporting

  28. STRS – Retirees • Unused and Excess Sick Leave At Retirement • Basic Sick Leave • One Day’s Paid Leave of Absence per Pay Period • Excess Sick Leave • Number of Days in Excess of Basic Sick Leave • Employer Pays Present Value for Excess Sick Leave • Service Credit: • (Basic Days + Excess Days) /Contract Base Days • Employers Required to Report Basic & Excess Separately at Retirement (See Express Benefit Form SR0554E)

  29. PERS - Contributions • California Public Employees’ Retirement System (CalPERS) • Classic Member Currently 7% • New Members Currently 6% • Employers Contribution Currently 11.442% • Changes every fiscal year base on Actuary Assessment • PERS rate is an employer pool rate

  30. PERS – Qualifications • Membership Qualifications: • Permanent Full-Time (40 hours per week) • Part-Time Averaging at Least 20Hrs/Wk • for at least one year • Full-Time Temp Assignment in Excess of 6 Months • Currently a Member

  31. PERS – Qualifications • Member Reciprocal Self-Certification Form (PERS-CASD-801) • Form is for employers to identify if new employees are classic members due to reciprocity • Employers need to properly identify status of members at the time of hire (See Circular Letter 200-063-12 in Concepts Docs)

  32. PERS - Qualifications • Temporary, Seasonal, On Call, Emergency, Substitute or Irregular Basis: • Qualifies When Worked 1000 Hrs or 125 Days in Fiscal Year • OT Hrs. ARE Included for Qualifying Purposes • Escape Report Retire09

  33. PERS - Exclusions • Membership Exclusions: (Notice of Exclusion - AESD-139) • Independent Contractors • Elected or Appointed Officers (effect July 1, 1994) • Students employed by a school district they attend in a position established for students only

  34. PERS Retirement Verification

  35. PERS–Enrollment/Change Form • New Procedure • Log into PERS • Verify the employees PERS status • Verify employees enrollment level • Classic or New • Print a snap shot of PERS record in PERS • Log into Escape Employee Management • Go to Retirement tab (based on PERS info) • Setup employee’s retirement status • Setup employee’s retirement level

  36. PERS–Enrollment/Change Form • New Procedure • Forward to Maria in Business Services • Required Prior to First Payroll • PERS snap shot of employees PERS status/level • Form example in Concepts – Retirement documentation • Member Self - Certification Form • Form example in Concepts - Retirement documentation • PERS Enrollment/Change Form • Form example in Concepts - Retirement documentation

  37. PERS - Compensation • Compensation: • Pay Rate – Member’s Normal Rate of Pay or Base Pay • Report as Earned According to Job Classification • Must be Reflected in Pay Schedule or Bargaining Unit Agreement • PERS Members Can Be Paid on Monthly Basis, Hourly Basis or Daily Basis

  38. PERS - Compensation • CalPERS Compensation Cap for New Members (Employee Portion Only) • Members Participating in Social Security • Compensation Capped at the Social Security Wage Base • For 2014 the Compensation Cap is $260,000 • Members Not Participating in Social Security • Compensation Capped at 120% of the Social Security Wage Base • For 2014 the Compensation Cap is $138,077

  39. PERS - Compensation • CalPERS Compensation Cap for Classic Members (Employee Portion Only) • For 2014 the Compensation Cap is $126,000 • CalPERS Circular Letter 200-007-14 • Copy provided in Concepts – Retirement Documentation

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