2018 - 2019 SCLEAMemorandum of Understanding:   Article 12: Deferred Compensation and Retirement

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What’s on this Page

• 12.1 Deferred Compensation ― Voluntary Program
• 12.2 Deferred Compensation ― County Paid Program
• 12.3 414(h)(2) ― Tax Deferred Retirement Contribution
• 12.4 Safety Employees Hired Before January 1, 2013 
(3% at 50 Plan A Safety Members)
• 12.5 New Retirement Tier For Safety Employees Hired On Or After January 1, 2013
• 12.6 General Employees Hired Before January 1, 2013 
(3% at 60 Plan A General Members)
• 12.7 New Retirement Tier For General Employees Hired On Or After January 1, 2013

Read Next: Article 13: Direct Deposit

12.1 Deferred Compensation ― Voluntary Program

The County agrees to maintain the current voluntary deferred compensation plan for Bargaining Unit members eligible under Federal law and the rules of the deferred compensation plan.

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12.2 Deferred Compensation ― County Paid Program

12.2.1

Effective December 1, 2015, for each eligible SCLEA member, the County shall deposit one percent (1%) of the employee’s bi-weekly base salary into the employee’s deferred compensation account.

12.2.2

To receive such deferred compensation, such employees must be in paid status for at least fifty (50%) of the employee’s allocated full-time equivalent (FTE) position.

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12.3 414(h)(2) ― Tax Deferred Retirement Contribution

All employees covered by this Memorandum who belong to the retirement system shall have their wages adjusted according to Section 414(h)(2) of the Internal Revenue Code which will have the effect of deferring Federal and State income taxes on the retirement contribution.

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12.4 Safety Employees Hired Before January 1, 2013 
(3% at 50 Plan A Safety Members)

This Section 12.4 (including subsections) shall apply to safety employees hired before January 1, 2013 who are contributing members of the Sonoma County Employees’ Retirement Association (“SCERA”) and to employees hired after that date who qualified for pension reciprocity as stated in Government Code Section 7522.02(c) and related SCERA reciprocity requirements:

12.4.1 Final Compensation Based On Single Year

For purposes of determining a retirement benefit, final compensation for employees covered by this Section 12.4 shall mean the average annual compensation earnable by the member as specified in Government Code Section 31462.1.

12.4.2 3% @ 50 Pension Formula

The “3% at 50” enhanced retirement program will be available to safety employees covered by this Section 12.4 who are contributing members of SCERA.

12.4.4 Required Employee Contribution

SCERA members covered by this Section 12.4 will contribute the amount required by SCERA as employee contributions, and shall continue to contribute an additional three percent (3%) of any compensation from which retirement deductions are required to be made to their employee retirement account. The additional contributions shall be deducted from the employee’s compensation pretax and they shall become part of the accumulated retirement contributions of the employees. This contribution to defray the cost of the unfunded accrued actuarial liability for any past service due to the enhanced retirement programs will continue until July 2024.

12.4.5 Employee Cost Share – 50% of Normal Cost

1. Effective the first full pay period following July 1, 2016, each active Safety member of the Sonoma County Employees Retirement Association (SCERA) covered by this Section 12.4 shall contribute one and one half percent (1.5%) of any compensation required to be made to their employee retirement account as a contribution towards one half of the total normal cost (“total normal cost” includes both employer and member shares). The additional contribution shall be deducted from the employees’ compensation pretax and they shall become part of the accumulated retirement contributions of the employee. Employees covered by this Section 12.4.4.(a) shall receive a lump sum benefit allowance each pay period as a reimbursement for the cost share arrangement, equal to the dollar value of the deduction described in this paragraph less any required taxes.  
2. Effective March 14, 2017, each active Safety member of the Sonoma County Employees Retirement Association (SCERA) covered by this Section 12.4 shall contribute an additional one and one third percent (1.3%) for a total of 2.8% of any compensation required to be made to their employee retirement account as a contribution towards one half of the total normal cost (“total normal cost” includes both employer and member shares). The additional contribution shall be deducted from the employees’ compensation pretax and they shall become part of the accumulated retirement contributions of the employee. Employees covered by this Section 12.4.4.(b) shall receive a lump sum benefit allowance each pay period as a reimbursement for the cost share arrangement, equal to the dollar value of the deduction described in this paragraph less any required taxes.
3. The lump sum benefit allowance described in Sections 12.4.4 (a) and (b) will not be included in wages for computations of overtime, pension benefits or for any County benefit related purpose. The parties acknowledge that the negotiated cost share arrangement is subject to the approval of the Sonoma County Employees Retirement Association (SCERA) Board. In the event SCERA does not accept the purpose of the lump sum benefit as described herein, or if the SCERA deems the benefit allowance as pensionable compensation, the parties agree to reopen this Section of the contract to meet and confer on a replacement pension cost share arrangement.

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12.5 New Retirement Tier For Safety Employees Hired On Or After January 1, 2013

Effective January 1, 2013, this Section 12.5 (including subsections) shall apply to safety employees who are contributing members of the SCERA who were hired or on after January 1, 2013 and who do not qualify for pension reciprocity as stated in Government Code Section 7522.02 (c). (Plan B Safety Members)

12.5.1 Final Compensation Based On Three Year Average

As required by Government Code Section 7522.32, effective January 1, 2013, for the purposes of determining a retirement benefit, final compensation shall mean the highest average pensionable compensation earned during 36 consecutive months of service.

12.5.2 2% @ 50 – 2.7% @ 57 Pension Formula

As required by Government Code Section 7522.25, the safety Option Plan Two (2% @ 50 – 2.7% @ 57) pension formula shall apply to employees covered by this Section 12.5 who are contributing members of the SCERA.

12.5.3 Required Employee Contribution

As required by Government Code Section 7522.04(g), SCERA safety members covered by this Section 12.4 shall pay 50 percent (50%) of normal costs.  In addition, effective January 1, 2013, SCERA members covered by this Section 12.5 shall pay 3.0 percent (3%) of any compensation from which retirement deductions are required to be made to their employee retirement account. The additional contributions shall be deducted from the employee’s compensation pretax and shall become part of the accumulated retirement contributions of the employees. This contribution to defray the cost of the unfunded accrued actuarial liability will continue until July 2024.

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12.6 General Employees Hired Before January 1, 2013 
(3% at 60 Plan A General Members)

Effective January 1, 2013, this Section 12.6 (including subsections) shall apply to general employees hired before January 1, 2013 who are contributing members of the SCERA and to employees hired after that date who qualified for pension reciprocity as stated in Government Code Section 7522.02(c) and related SCERA reciprocity requirements:

12.6.1 Final Compensation Based On Single Year

For purposes of determining a retirement benefit, final compensation for employees covered by this Section 12.6 shall mean the average annual compensation earnable by the member as specified in Government Code Section 31462.1.

12.6.2 3% @ 60 Pension Formula

The “3% at 60” Plan A General will be available to general employees covered by this Section 12.6.“”

12.6.3 Required Employee Contribution

SCERA members covered by this Section 12.6 will contribute the amount required by SCERA as employee contributions, and shall continue to contribute an additional 3.03 percent (3.03%) of any compensation from which retirement deductions are required to be made under the 1937 Act to their employee retirement account.  This additional contribution shall be deducted from the employees’ compensation pretax and shall become part of the accumulated retirement contributions of the employees.  This contribution to defray the cost of the unfunded accrued actuarial liability for any past service due to the enhanced retirement programs will continue until July 2024.  Represented employees covered by this Section 12.6 also will pay a pretax statutory contribution of approximately 1% to 1.25%, contingent upon age of entry into the retirement system.

12.6.4 Employee Cost Share – 50% of Nominal Cost

1. Effective the first full pay period following July 1, 2016, and subject to Sonoma County Employees Retirement Association (SCERA) Board approval of the cost share arrangement under the terms described herein, active County General legacy members of SCERA will contribute one third of the actuarially determined difference between the average General legacy employee retirement rate (exclusive of the 3.03% payroll contribution toward the UAAL described in section 12.6.3 of the MOU) and one half the total normal cost (“total normal cost” includes both employer and member shares) calculated as an average for General legacy members of the Sonoma County Employees Retirement Association (SCERA) covered by this Section 12.6 based on rates of all active County General legacy members, with the difference computed to a factor and applied equally to all legacy members. Such legacy employees will receive a lump sum benefit allowance as reimbursement for this pension cost share arrangement each pay period equal to the dollar value of the deduction described in this paragraph, less any required taxes.
2. Effective the first full pay period following July 1, 2017, and subject to Sonoma County Employees Retirement Association (SCERA) Board approval of the cost share arrangement under the terms described herein, active County General legacy members of SCERA will contribute an additional one third (for a total of two thirds) of the actuarially determined difference between the average General legacy employee retirement rate (exclusive of the 3.03% payroll contribution toward the UAAL described in section 12.6.3 of the MOU) and one half the total normal cost (“total normal cost” includes both employer and member shares) calculated as an average for General legacy Members of the Sonoma County Employees Retirement Association (SCERA) covered by this Section 12.6 based on rates of all active County General legacy members, with the difference computed to a factor and applied equally to all legacy members. Such legacy employees will receive a lump sum benefit allowance as reimbursement for this pension cost share arrangement each pay period equal to the dollar value of the deduction described in this paragraph, less any required taxes.
3. The lump sum benefit allowance described in Sections 12.6.4 (a) and (b) will not be included in wages for computations of overtime, pension benefits or for any County benefit related purpose. The parties acknowledge that the negotiated cost share arrangement is subject to the approval of the Sonoma County Employees Retirement Association (SCERA) Board.  In the event SCERA does not accept the purpose of the lump sum benefit as described herein, if SCERA deems the benefit allowance as pensionable compensation, or if the pension reimbursement is determined to be taxable beyond FICA and Medicare taxation, the parties agree that this provision shall cease to be implemented and the parties will reopen this section of the contract to meet and confer on a replacement pension cost share arrangement, subject to mutual agreement of the parties.

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12.7 New Retirement Tier For General Employees Hired On Or After January 1, 2013

Effective January 1, 2013, this Section 12.7 (including subsections) shall apply to general employees hired on or after January 1, 2013 who are contributing members of the SCERA and to employees hired after that date who qualified for pension reciprocity as stated in Government Code Section 7522.02 (c). (Plan B General Members)

12.7.1 Final Compensation Based On Three Year Average

As required by Government Code Section 7522.32, effective January 1, 2013, for the purposes of determining a retirement benefit, final compensation shall mean the highest average pensionable compensation earned during 36 consecutive months of service.

12.7.2 2.0% @ 62 – 2.5% @ 67 Pension Formula

As required by Government Code Section 7522.20, the 2.0% at 62 pension formula shall be available to employees covered by this Section 12.7 who are contributing general members of the SCERA.

12.7.3 Required Employee Contribution

As required by Government Code Section 7522.04(g), SCERA general members covered by this Section 12.7 shall pay 50 percent (50%) of normal costs. In addition, effective January 1, 2013, SCERA members covered by this Section 12.7 shall pay 3.03 percent (3.03%) of any compensation from which retirement deductions are required to be made to their employee retirement account. The additional contributions shall be deducted from the employee’s compensation pretax and shall become part of the accumulated retirement contributions of the employees. This contribution to defray the cost of the unfunded accrued actuarial liability will continue until July 2024.

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