2019 - 2023 DSA Memorandum of Understanding: Article 12: Deferred Compensation and Retirement

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What’s on this Page

• 12.1 Deferred Compensation and Retirement
• 12.2 414(h)(2) - Tax Deferred Retirement Contribution
• 12.3 Safety Employees Hired Before January 1, 2013 (3% at 55 – 3% at 50 Enhanced Safety Retirement Program)
  12.3.1 Final Compensation Based on Single Year
  12.3.2 3% @ 50 Pension Formula
  12.3.3 Required Employee Contribution
  12.3.4 Employee Cost Share – 50% of Normal Cost
• 12.4 New Retirement Tier for Safety Employees Hired On or After January 1, 2013
  12.4.1 Final Compensation Based on Three Year Average
  12.4.2 2% @ 50 – 2.7% @ 57 Pension Formula
  12.4.3 Required Employee Contribution

Read Next: Article 13: Direct Deposit

12.1 Deferred Compensation and Retirement

The County agrees to provide the employees covered by this Memorandum of Understanding the opportunity to participate in the County’s Deferred Compensation Plan. Participation shall be on the same basis and in the same manner as other non-management employees are presently authorized to participate Nothing herein renders the County liable to the Association or any employee for the discontinuance of Internal Revenue Service or Franchise Tax Board approval of any County Deferred Compensation Plan or portion thereof.

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12.2 414(h)(2) - Tax Deferred Retirement Contribution

All employees covered by this Memorandum who belong to the Sonoma County Employees’ Retirement Association 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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12.3 Safety Employees Hired Before January 1, 2013 (3% at 55 – 3% at 50 Enhanced Safety Retirement Program)

This Section 12.3 (including Subsections) shall apply to safety employees hired before January 1, 2013 who are contributing members of the Sonoma County Employees’ Retirement Association (“SCERA”) or who are hired after that date and qualify for pension reciprocity as stated in Government Code Section 7522.02(c) and any related SCERA reciprocity requirements:

12.3.1 Final Compensation Based on Single Year

For purposes of determining a retirement benefit, final compensation for employees covered by this Section 12.3 shall be defined as stated in Government Code Section 31462.1.

12.3.2 3% @ 50 Pension Formula

The “3% at 50” enhanced retirement program will be available to contributing safety members of SCERA covered by this Section 12.3.

12.3.3 Required Employee Contribution

SCERA members covered by this Section 12.3 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 employees’ compensation pretax and they shall become part of the accumulated retirement contributions of the employees. This contribution is intended to defray the cost of the retirement plan’s unfunded accrued actuarial liability. The County and the DSA agree it is their mutual intent that the aforementioned three percent (3%) employee contributions described in this Subsection shall continue, unless modified by mutual agreement between the County and the DSA.

12.3.4 Employee Cost Share – 50% of Normal Cost

1. Effective March 1, 2016, each active Safety member of the Sonoma County Employees Retirement Association (SCERA) covered by this Section 12.3 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 12.3.4.(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 12.3 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 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 12.3.4.(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 12.3.4 (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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12.4 New Retirement Tier for Safety Employees Hired On or After January 1, 2013

Effective January 1, 2013, this Section 12.4 (including subsections) applies to safety employees hired or on after January 1, 2013 who are or become contributing members of the SCERA and who do not qualify for pension reciprocity as stated in Government Code Section 7522.02(c):

12.4.1 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.

12.4.2 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 12.4 who are contributing members of the SCERA.

12.4.3 Required Employee Contribution

As required by Government Code Section 7522.04(g), SCERA safety members shall pay 50 percent (50%) of normal costs. In addition, SCERA members covered by this Section 12.4 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 unless modified by a subsequent agreement between the County and DSA. The amortization period for funding the unfunded accrued actuarial liability for any past service due to the enhanced retirement programs described above has been established by SCERA to be twenty (20) years. The County and DSA agree it is their mutual intent that the aforementioned employee contributions described in this Subsection shall cease at the end of the twenty (20) year amortization period which began July 2003 and shall end with the last pay period in June 2023.

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