lifecycle of service and salaries
Post on 11-Feb-2016
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Lifecycle of Service and Salaries
Division of Retirement and Benefits
Lifecycle of Service and SalariesLifecycle of Service and Salaries
•Division of Retirement and BenefitsTasks and Goals
Lifecycle of Service and SalariesLifecycle of Service and Salaries
•Division of Retirement and Benefits• Employer
Tasks and Goals
Lifecycle of Service and SalariesLifecycle of Service and Salaries
•Division of Retirement and Benefits• Employer• Employee
Tasks and Goals
PERS Defined Benefit Plan
PERS Defined Benefit Plan PERS Defined Benefit Plan
• Hired, then terminated 30 years later• One employer• Consistent salary trend• No breaks in service
• Verification needed:• Termination date• Final salary
The Simplest Scenario
It’s Not Always That Simple
PERS Defined Benefit Plan PERS Defined Benefit Plan
PERS Defined Benefit Plan PERS Defined Benefit Plan
What if the employee has leave without pay (LWOP)?
It’s Not Always That Simple
PERS Defined Benefit Plan PERS Defined Benefit Plan
What if the employee has leave without pay (LWOP)?•Large blocks of LWOP should be reported through payroll.•Scattered hours of LWOP are usually not reported. These are determined by service verification.
It’s Not Always That Simple
PERS Defined Benefit Plan PERS Defined Benefit Plan
What if there are fluctuations in reported salaries?•Fluctuations in salaries are indicative of breaks in service. DRB reviews salaries when a member has applied for retirement. Fluctuations will result in a request for verification.
Add Some Complexity
PERS Defined Benefit Plan PERS Defined Benefit Plan
An employee is vested in PERS, and claims service.•In many cases, DRB will ask for verification of the vesting year’s salary so the cost of the claimed service can be calculated.
Claiming Service
PERS Defined Benefit Plan PERS Defined Benefit Plan
In certain situations, verification of types of service is required (temporary service claims, workers’ compensation LWOP) to determine service credit.
Claiming Service
PERS Defined Benefit Plan PERS Defined Benefit Plan
• If a PERS retiree returns to PERS employment, the benefit ceases until termination.• Reemployment dates must be promptly
reported to avoid overpayments.
Reemployed Retirees
PERS DB Summary
TRS Defined Benefit Plan
TRS Defined Benefit PlanTRS Defined Benefit Plan
• Hired, then terminated 25 years later• One employer• Consistent salary trend• No breaks in service
• Verification needed:• Termination date• Final contract salary
The Simplest Scenario
TRS Defined Benefit PlanTRS Defined Benefit Plan
• If salary fluctuations are observed;• if there is a late hire date;• if service ends before the normal end of the
school year;• if there is a combination of part-time and
full-time teaching service; or• if there is a question of vesting or
service-based retirement eligibility.
When is Service Verified?
TRS Defined Benefit PlanTRS Defined Benefit Plan
In many cases, DRB will ask for verification of the base entry contract salary so the cost of the claimed service can be calculated.
Claiming Service
TRS Defined Benefit PlanTRS Defined Benefit Plan
Leave of Absence Without Pay (LWOP)• Contributions based on the salary that would
have been earned had the employee continued to work. The cost to the employee is the employee and employer contributions.
Claiming Service
TRS Defined Benefit PlanTRS Defined Benefit Plan
• If a TRS retiree returns to TRS employment, the benefit ceases until termination.• Reemployment dates must be promptly
reported to avoid overpayments.
Reemployed Retirees
TRS DB Summary
PERS/TRS Defined Contribution Plan
PERS/TRS Defined Contribution PERS/TRS Defined Contribution PlanPlan
• Hired, then terminated 30 years later at age 65• One employer• Consistent salary trend• No breaks in service
• Verification needed:• Termination date
The Simplest Scenario
PERS/TRS Defined Contribution PERS/TRS Defined Contribution PlanPlan
• Consistent reporting of earnings and employee and employer contributions• Consistent employer payments of
contributions to the Health Reimbursement Arrangement (HRA)• Consistent reporting of LWOP events
The Key Is Consistency
PERS/TRS Defined Contribution PERS/TRS Defined Contribution PlanPlan
• Employers contribute 3% of the annual average employee compensation of all PERS and TRS participants to the HRA account.• HRA contributions remain in the plan in the
employee’s name, even if they terminate employment prior to HRA eligibility.
HRA Contributions
PERS/TRS Defined Contribution PERS/TRS Defined Contribution PlanPlan
If an employee terminates and is not fully vested in the employer’s contributions, the non-vested contributions will be returned to the employer.
Returning Employer Contributions
PERS/TRS Defined Contribution PERS/TRS Defined Contribution PlanPlan
Service is important to the DCR:• Determines vesting for employer contributions• Determines service-based retirement eligibility• Determines HRA eligibility• Determines medical plan eligibility• Determines medical premium subsidy
percentage
Service Verifications
PER/TRS DCR Summary
DivorceDivorceIf a member divorces, a specific verification may be needed.•PERS – verification of salary from and to a certain date.•TRS – verification of salary and days served from and to a certain date.
Active Duty Military ServiceActive Duty Military ServiceIf a member is called to active military duty, it is very important for the employer to correctly place the employee in LWOP.When the employee returns to employment, the period of active duty military service must be claimed (employee submits a written request to DRB).No contributions are required.
Service CorrectionsService CorrectionsAfter verification, a service correction may be needed. In this situation, the employer must pay any deficient employer contributions due.A deficient contributions indebtedness will be established for the employee’s portion.
Contribution ReportingContribution Reporting• Ongoing• Corrections•Make-whole agreements• DCR Disability• DCR Death
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