public employees retirement association of minnesota · public employees retirement association of...
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Public Employees Retirement Association of Minnesota
Serving Minnesota’s Public Employees For Over 80 Years
Public Employees Retirement Association of Minnesota
Alright, let’s take a moment to recap…
After a year of changes, what employers need to know about administering PERA
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Public Employees Retirement Association of Minnesota
• 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
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Public Employees Retirement Association of Minnesota
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
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Public Employees Retirement Association of Minnesota
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.
1Exclusions will be discussed later in the presentation
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Public Employees Retirement Association of Minnesota
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.
Public Employees Retirement Association of Minnesota
Exclusions • In some instances, individuals are excluded from
participating in the Defined Benefit Plan • Full list of exclusions is in Statute
353.01 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)
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Public Employees Retirement Association of Minnesota
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
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Public Employees Retirement Association of Minnesota
Notice of Non-Covered Employment or Provisional Coverage
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Public Employees Retirement Association of Minnesota
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.
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Public Employees Retirement Association of Minnesota
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
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Public Employees Retirement Association of Minnesota
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
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Public Employees Retirement Association of Minnesota
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.
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Public Employees Retirement Association of Minnesota
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.
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Public Employees Retirement Association of Minnesota
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
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Public Employees Retirement Association of Minnesota
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)
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Public Employees Retirement Association of Minnesota
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
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Public Employees Retirement Association of Minnesota
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.
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Public Employees Retirement Association of Minnesota
Who you gonna call!? • Additional
information – Refer to the
Employer Manual – Contact PERA
• Employer Response Line
– 651-296-3636 – 1-888-892-7372
• www.mnpera.org – Contact Us
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Public Employees Retirement Association of Minnesota
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. 353. 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.
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