PECG Memorandum of Understanding

Professional Engineers in California Government

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PECG Memorandum of Understanding

Contract Overview | Table of Contents

ARTICLE 11
RETIREMENT

11.1 First Tier Eligibility for Employees in Second Tier

An employee in the Second Tier may exercise the Tier 1 right of election at any time. An employee who makes this election would then be eligible to purchase past Second Tier service. The parties will work with CalPERS to establish more flexible purchase provisions for employees. These include, but are not limited to, increasing the installment period from 96 months (8 years) to 144 months (12 years) or up to 180 months (15 years), and allowing employees to purchase partial amounts of service.

New employees who meet the criteria for CalPERS membership would be enrolled in the First Tier plan and have the right to be covered under the Second Tier plan within 180 days of the date of their appointment. If a new employee does not make an election for Second Tier coverage during this period, he or she would remain in the First Tier plan.

Employees who purchase their past service would be required to pay the amount of contributions they would have paid had they been First Tier members during the period of service that they are purchasing. If required by CalPERS law, the amount will include interest.

11.2 401(k) Deferred Compensation Program

Employees in Unit 9 may participate in the State of California, Department of Personnel Administration, existing 401(k) Deferred Compensation Program.

11.3 457 Deferred Compensation Program

Employees in Unit 9 may participate in the current State of California, Department of Personnel Administration, 457 Deferred Compensation Program.

11.4 Tax Deferral of Lump Sum Leave Cash Out Upon Separation

A. Effective October 31, 2002, to the extent permitted by federal and state law, employees who separate from State service who are otherwise eligible to cash out their vacation and/or annual leave balance, may ask the State to tax defer and transfer a designated monthly amount from their cash payment into their existing 457 and/or 401k plan offered through the State's Savings Plus Program (SPP).

B. If an employee does not have an existing 457 and/or 401k plan account, he/she must enroll in the SPP and become a participant in one or both plans no less than 60 days prior to his/her date of separation.

C. Such transfers are subject to and contingent upon all statutes, laws, rules and regulations authorizing such transfers including those governing the amount of annual deferrals.

D. Employees electing to make such a transfer shall bear full tax liability, if any, for the leave transferred (e.g., 'over-defers' exceeding the limitation on annual deferrals).

E. Implementation, continuation and administration of this section is expressly subject to and contingent upon compliance with the SPP's governing Plan document (which may at the State's discretion be amended from time to time), and applicable federal and state laws, rules and regulations.

F. Disputes arising under this section of the MOU shall not be subject to the grievance and arbitration provision of this agreement.

11.5 Determination of Safety Retirement Eligibility

The provisions of Government Code sections 19816.20 and 20405.1 shall apply to Unit 9.

11.8 Employee Retirement Contribution Reduction For Safety Members

If the Board of Administration of the California Public Employees Retirement System (CalPERS) informs the parties in writing that it has determined that the recent temporary arrangement whereby state employees were relieved of paying into their retirement fund may be extended for 12 months and that such an extension would be fiduciarily sound and meet the Board's established actuarial standards, which in turn provides temporary cash flow relief to the State, the parties will agree to the following:

1. Effective the first of the pay period following approval by the CalPERS Board and ratification of the Legislature and continuing for 12 monthly pay periods thereafter, the State agrees to the following:

' Employees who are safety members (2.5% at 55) under the Public Employees' Retirement System (CalPERS), shall have their employee retirement contribution rate reduced from 6% of monthly compensation in excess of three hundred seventeen ($317) dollars each month to 1.0% of compensation in excess of three hundred seventeen ($317) dollars each month.

2. After 12 months, the employee's retirement contribution rate shall be restored to levels in effect on August 30, 2001.

3. The State employer will continue to ensure that pension benefits are properly funded in accordance with generally accepted actuarial practices. In accordance with the provisions of the June 20, 2001 communication to DPA from CalPERS' Actuarial & Employer Services Division, effective the date referenced in paragraph 1 above, the State Employers' CalPERS retirement contribution rate shall incorporate the impact resulting from the temporary reduction in the employee retirement contribution rate. As indicated in the above referenced letter, '10% of the net unamortized actuarial loss shall be amortized each year.' However, if the CalPERS Board of Administration alters the amortization schedule referenced above in a manner that accelerates the employer payment obligation, either party to this agreement may declare this section of the Contract, and all obligations set forth herein, to be null and void. In the event this Contract becomes null and void, the employee retirement contribution rate shall be restored to levels in effect on August 30, 2001, and the parties shall be obligated to immediately meet and confer in good faith to discuss alternative provisions.

11.9 Employee Retirement Contribution Reduction For Miscellaneous Members

If the Board of Administration of the California Public Employees Retirement Systems (CalPERS) informs the parties in writing that it has determined that the recent temporary arrangement whereby state employees were relieved of paying into their retirement fund may be extended for 12 months and that such an extension would be fiduciarily sound and meet the Board's established actuarial standards, which in turn provides temporary cash flow relief to the State, the parties will agree to the following:

' Employees who are miscellaneous and/or industrial members of the first tier plan, and who are subject to Social Security under the Public Employees' Retirement System (CalPERS), shall have their employee retirement contribution rate reduced to zero.

' Employees who are miscellaneous and/or industrial members of the first tier plan, and who are not subject to Social Security under the Public Employees' Retirement System (CalPERS), shall have their employee retirement contribution rate reduced from 6% of compensation in excess of three hundred seventeen ($317) dollars each month to 1.0% of compensation in excess of three hundred seventeen ($317) dollars each month.

2. After 12 months, the employee's retirement contribution rate shall be restored to levels in effect on August 30, 2001.

3. The State employer will continue to ensure that pension benefits are properly funded in accordance with generally accepted actuarial practices. In accordance with the provisions of the June 20, 2001 communication to DPA from CalPERS' Actuarial & Employer Services Division, effective the date referenced in paragraph 1 above, the State Employers' CalPERS retirement contribution rate shall incorporate the impact resulting from the temporary reduction in the employee retirement contribution rate. As indicated in the above referenced letter. '10% of the net unamortized actuarial loss shall be amortized each year.' However, if the CalPERS Board of Administration alters the amortization schedule referenced above in a manner that accelerates the employer payment obligation, either party to this agreement may declare this section of the Contract, and all obligations set forth herein, to be null and void. In the event this Contract becomes null and void, the employee retirement contribution rate shall be restored to levels in effect on August 30, 2001, and the parties shall be obligated to immediately meet and confer in good faith to discuss alternative provisions.