What PERA Employers need to know

Transcription

1 Public Employees Retirement Association of Minnesota Serving Minnesota s public employees for more than 80 Years 1 What PERA Employers need to know Legislative changes, membership updates, reporting revisions and more 2 Today s agenda: Plan Overview Defined Benefit Plan Basics Eligibility Exclusions Recent Legislation Overtime Reporting Phased Retirement Option Reporting Defined Contribution Plan 3 1

2 Defined Benefit Plan (DBP) One of the most important determinations an employer makes is if a position within the agency and the employee who holds it qualifies for coverage in PERA. Laws discussed in this presentation describe the membership eligibility requirements for PERA s Defined Benefit Plans as well as some basic information on the plan itself. 4 DBP Basics A Defined Benefit Plan provides a benefit based on a formula, not on a member s account balance at retirement. For PERA members, the benefit is based on: Years of service For each month in which there are PERAeligible earnings, the member receives one month service credit High five salary This is the highest 60 consecutive months of earnings wherever it falls in the member s employment (typically, it is the last five years worked, but it may come earlier in the person s career) Plan specific multiplier Age at time of retirement 5 Eligibility Mandatory Coverage Membership in a PERA Defined Benefit Plan is mandatory for public employees filling non elected positions whose salary from one governmental subdivision exceeds an annual earnings threshold. Includes full or part time employees hired to fill positions that are permanent. 1 Exclusions will be discussed later in the presentation 6 2

3 Membership Eligibility Longstanding minimum salary threshold of $425 in any month is replaced with annualized threshold of $5,100, or $3,800 for 9- or 10-month school employees effective Jan. 1, Current members retain membership until termination. The membership exclusions covering temporary and seasonal positions will only apply if it is the sole employment of the person under a single employer. Employers must examine current employees excluded under the $425 earning threshold by Jan. 1, as well as those holding multiple positions. Exclusions In some instances, individuals are excluded from participating in the Defined Benefit Plan Full list of exclusions is in Statute and Chapter 3 of the PERA Employer Manual Most common exclusions Employee never reaches the annual earnings threshold Full time student under the age of 23 Solely Temporary Employee (as defined in PERA law) Solely Seasonal Employee (as defined in PERA law) Re employed PERA Retirees Elected governing body official whose term of office began after June 30, Multiple Positions Person who hold more than one position may require combining salary to determine eligibility When salary is combined Positions are held concurrently with the same employer and All positions are permanent and are not covered by a non salary exclusions (i.e. is solely not temporary, seasonal, etc.). When salary is not combined Positions are with different employers Positions are excluded as temporary or seasonal and there is a clear 30 day break in service 9 3

4 Notice of Non-Covered Employment or Provisional Coverage 10 Exclusion Notification Employers are required by statute to inform newly hired employees of exclusion from PERA coverage within 2 weeks of hire. As seen above, excluded employees have the right to request a review of eligibility. They should first discuss this review with the employer

5 This form is available on 13 Example 1 SITUATION: Nine/Ten month school year employees on 1/1/2015 who are not PERA members on 12/31/2014. What are the employer s responsibilities? 14 Example 1 ANSWER: The employer must review the employment situation and earnings of these non-members to determine if the employees continue to be excluded from PERA membership under the $3800 annual salary threshold. When doing this evaluation, the employer should consider the earnings that the employee will be paid during the school year. A. If the employer determines that the employee is not expected to have earnings in the Fiscal Year 2015 (7/1/14-6/30/15) that exceed $3800, the employer must give the Notice of Exclusion from PERA Participation form to the employee within 2 weeks of making the determination. B. If the employee's FY salary is expected/anticipated to exceed $3800, the employer must enroll the employee into PERA at the start of the 2015 calendar year. PERA will not assess any omitted deductions for the earnings paid to the employee in PERA membership will continue for the employee until s/he terminates employment. 15 5

6 Example 2 SITUATION: An employee works part time earning $2500 per year and is excluded from PERA because earnings are not projected to exceed the annual threshold. On 3/15/2015, the employee begins a second part time position working 10 hours per week at $10.00 per hour (projected annual income $4160). 16 Example 2 ANSWER: The employee should be enrolled in PERA as of 3/15/15, because the combined earnings from both part time positions are projected to exceed the $5100 annual threshold. The employer must enroll at the start of the second position rather than waiting until the annual threshold is reached. 17 PERA 2014 Legislation Phased Retirement Extended Sunset Date of Phased Retirement Option (PRO) Program moved to 6/30/2019 Current Agreement Features Unchanged May be with the same or a different employer Initial offer to a member to work under the PRO must not exceed one year, but can be renewed for periods of up to a year for a total of five years 18 6

7 PERA 2014 Legislation Contributions The contributions to the Coordinated Plan will increase by 0.25 percent of pay on Jan. 1, 2015, for members and employers Member: from 6.25 percent to 6.50 percent Employer: from 7.25 percent to 7.50 percent Any future Coordinated Plan contribution rate increases will occur on Jan. 1, rather than July 1 19 PERA 2014 Legislation Report Overtime Pay Why do we require overtime pay information? PERA requested this information from our employers to investigate the use of overtime for pension spiking. We did not receive the response required to make an educated policy decision based on data. Before making policy, we determined more information was necessary and asked the legislature to help us secure it. 20 PERA 2014 Legislation Report Overtime Pay Employers must report the portion of PERA-eligible salary that is overtime pay for members (effective Jan. 1, 2015). Overtime has always been PERA eligible salary The total earnings remain unchanged. The portion that is OT is to be reported in the OT column. Overtime paid when earned File layout for the Salary Deduction Report (SDR) will have fields for overtime pay and for adjusting (-+) overtime pay previously reported. 21 7

8 PERA Exclusion Reporting has Changed Background Employers report employment and salary information to PERA on all individuals who worked during the previous fiscal year and did not participate in PERA or another MN retirement system About 85,000 workers each year The report is due from school districts by 8/31 each year The report is due 2/28 for non-school employers 22 PERA Exclusion Reporting has Changed Effective 7/1/2014, PERA made changes to the report contents and eliminated paper forms for employers with and internet access The department head of each employer unit must certify to PERA that the report is accurate and complete (legal requirement) 23 PERA Exclusion Reporting has Changed What will be Different? List only excluded employees, no contractors Provide the employee s partial SSN unless the worker is a reemployed PERA retiree Some exclusion codes have changed. If you list TRA members, use 002; do not use 000 (NOT A VALID CODE) 24 8

9 PERA Exclusion Reporting has Changed Use PERA s secure web employer system (ERIS) to transmit the data file To meet the report certification requirements, the person sending the file must be logged in ERIS with the employer number that matches the data in the file. 25 PERA Exclusion Reporting has Changed Ensure you are ready to submit your 2014 Exclusion Report PERA should review test files Each employer needs to have one or more active ERIS Administrators or Representatives PERA needs valid addresses for your Payroll Contacts 26 Receiving GASB 68 Information from PERA PERA will help employers learn about the new accounting standards taking effect in FY 2015 for local and state governments Submit contact data for those who prepare your organization s financial statements. A short survey is available on to submit this information. PERA s website ( Several resources (toolkit, webinar slides, videos) 27 9

10 Defined Contribution Plan An important step in the Defined Contribution Plan (DCP) process is for the employer to inform eligible employees of the option to enroll in DCP. Rules and laws discussed in this presentation describe the membership eligibility requirements for PERA s Defined Contribution Plan and Social Security coverage for new DCP members. 28 DCP Basics PERA s Defined Contribution Plan is an optional plan for certain types of employees, such as governing body officials and certain appointed officials. Governing Body Elected Officials those elected by the public and who have voting rights on how the entity conducts business (e.g. school board) 29 DCP Basics PERA s DCP is a tax qualified plan that provides an investment opportunity to those who qualify for the plan. Contributions from both employee and employer No minimum salary to participate (w/ one exception) Optional on part of each individual Individual can choose from 7 different funds to invest in (information on each fund available in Prospectus) Eligible to receive lump sum value of the account upon termination of public service 30 10

11 Elected Official Eligibility Elected or Appointed Officials Can begin participating in the DCP any time while in office; but no retroactive coverage Official must authorize the withholding of deductions by signing the Membership Election by Public Officials form Can stop any time while in office by providing signed documentation to the employer (who forwards it to PERA); withdrawal of funds not allowed until termination of service 31 Appointed Officials Eligibility Appointed Public Officials Individuals appointed to fill what is normally an elected position (e.g. someone appointed to complete the term of a school board member who resigns) Individuals first appointed after June 30, 2010, to a board or commission of a governmental unit (e.g. joint powers board, planning commission) if earnings exceed $425 in any one month 32 Questions? 33 11

12 More information Additional information and questions Refer to the Employer Manual Contact PERA Employer Response Line Contact Us 34 Disclaimer This presentation is meant to serve as an educational tool for public employers and is based on the laws in effect on the date noted herein. PERA reserves the right to revise the content of this presentation. The membership eligibility statutes that govern the PERA defined benefit plans are in Minn. Stat. Sec Should there be any conflict between this presentation and the governing statutes, or should the laws subsequently be changed by the legislature, the statutes in effect will prevail