Public Employees Retirement Association of Minnesota. Serving Minnesota s Public Employees For Over 80 Years

Transcription

1 Public Employees Retirement Association of Minnesota Serving Minnesota s Public Employees For Over 80 Years

2 Alright, let s take a moment to recap After a year of changes, what employers need to know about administering PERA 2

3 What s the plan? Defined Benefit Plan (DBP) Basics Eligibility Exclusions» Notice of Non-Covered Employment or Provisional Coverage Overtime Reporting Phased Retirement Option Defined Contribution Plan (DCP) Eligibility» Elected vs. Appointed 3

4 Defined Benefit Plan (DBP) 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 PERA-eligible 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 4

5 Eligibility Mandatory Coverage Membership in a PERA Defined Benefit Plan is mandatory for public employees filling nonelected 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 5

6 Membership Eligibility Longstanding minimum salary threshold of $425 in any month has been replaced with annualized threshold of $5,100, or $3,800 for 9- or 10-month school employees. Current members retain membership until termination. Employers should have examined current employees excluded under the $425 earning threshold by Jan. 1, as well as those holding multiple positions.

7 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 Re-employed PERA Retirees Elected governing body official whose term of office began after June 30, 2002 Two exclusions have changed Solely Temporary Employee (as defined in PERA law) Solely Seasonal Employee (as defined in PERA law) 7

8 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 excluded as temporary or seasonal and there is a clear 30 day break in service Positions are with different employers 8

9 Notice of Non-Covered Employment or Provisional Coverage 9

10 Exclusion Notification Employers are required by statute to inform newly hired employees of exclusion from PERA coverage for a salary-based reason within two 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. 10

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12 This form is available on 12

13 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 13

14 Contribution Rate Increase The contributions to the Coordinated Plan increased 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 14

15 Overtime Pay Employers must report the portion of PERA-eligible salary that is overtime pay for members 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) have fields for overtime pay and for adjusting (-+) overtime pay previously reported. 15

16 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. 16

17 Defined Contribution Plan (DCP) 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 17

18 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) 18

19 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 19

20 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 $5,100 annually. 20

21 Who you gonna call!? Additional information Refer to the Employer Manual Contact PERA Employer Response Line Contact Us 21

22 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. 22