It has been a long time between postings. Since the Legislature passed SB 1049 concerning diversion of part of the IAP contribution, salary cap, and a few other elements pertinent to the existing PERS members' accounts, things have been pretty quiet.
Predictably, the PERS Coalition filed suit within the 60-day window prescribed by the Legislature, contesting both the IAP diversion and the salary cap. Just as predictably, the State and the affected employers filed their responses. The plaintiffs (PERS Coalition) asked the Supreme Court to appoint a Special Master to compile the legal arguments, case law, and specific injuries so the Supreme Court would have a factual basis and a legal basis on which to draw their opinion. This was done in the Strunk case as well as in the Moro case. Unsurprisingly, the defendants (the State and other employers) objected to the appointment of a Special Master, by stipulating to the "facts" of the case and arguing that a narrow set of legal issues are at stake and that there is no need for a Special Master to sort the issues out. (This is unsurprising since the Respondents made nearly the identical arguments in Strunk and Moro, and the Court rejected their arguments both times). The Petitioners objected to the Defendants' argument and, as of today, things stand unresolved with the Supreme Court. It is unlikely that this will be untangled before Thanksgiving, making the likelihood of a formal Supreme Court resolution before the start of the 2021 Legislative Session.
Between the time of filing of the James et al case (the captioning for the SB 1049 litigation), the PERS Board finalized its decision on the 2020-21 assumed interest rate, leaving it at the current 7.2% rate that was set to expire on 12/31/19. They also confirmed that the Actuarial Equivalency Factors would remain unchanged for 2020-21. This means that both active and inactive members need not stampede to the door to exit before the end of 2019 to retain the current AEF and assumed interest rate. For actives, however, the effects of SB 1049 take effect on 1/1/2020 although there is still some confusion (mine mostly) on when the IAP diversion officially begins.
Not much else to report at this time. Once the Supreme Court oral arguments begin, or the Special Master begins taking testimony or both, I'll report back on what I expect based on what I read.
One caution. I will be traveling extensively from mid-January to the end of April. I will have wi-fi and email access until mid-March and then will be largely off-the-grid until late April. I expect that much of the litigation argument will take place during my traveling. I will be in the US for a good part of January - March, so if arguments occur then, I should be able to access them in near real time. But beginning in mid-March, I will have no access to any modern conveniences, especially wifi, so anything that occurs during that month of quiet for me will have to wait until my return.
Wishing all of you a happy holiday season and the blessings of good health.
9 comments:
The PERS Board is set to vote on new assumptions targeting Tier 1 working employees at their December meeting. The Board decided that they didn't need to tell anyone they are doing it, calling it "inconsequential", and that members can make up the lost benefits in a few months. That means by an April 2020 retirement date, Tier 1 members will get what they would have gotten if they had retired Dec. 1, 2019.
This is not "inconsequential." When PERS cut the assumed rate from 7.5 to 7.2 percent in 2017, they said the exact same thing about making it up in a few months. (However, this was not true in my case).
Many people rushed to retire in 2017 because of the .3 percent cut, and it was a very big deal. I figure that the current PERS agenda item to cut only Tier 1 benefits is about .3 percent also.
PERS did not tell anyone about this upcoming cut, that will take effect Jan. 1, 2020. They are up to no good, taking older workers PERS money. Didn't the 2019 legislature pass a bill that requires PERS to give its members 6 months notice before instituting changes that might negatively impact its members?
So, if you are Tier 1 and were planning to retire in the first four or five months of 202, you can retire by Dec. 1 and spend a more leisurely, if poorer, winter.
What can be done?
This is very unfair. Tier 1 employees should at least have been warned.
Please spread the word.
LK
lk. I have just spent more than an hour reviewing the board packet for the December 6 PERB meeting. Unless I am missing something quite subtle, the Dec Board meeting will largely be spent voting on the administrative rules necessary to implement SB 1049 and all its complicated parts. There is nothing in that bill, nor anything in the agenda that even remotely relates to some special plan to target Tier 1 active members. The changes implemented by SB 1049 will reduce IAP balances going forward by redirecting 2.5% of the 6% employee contribution on earnings after January 1, 2020, which Tier 3 members will see their IAP contributions reduced by 0.75% of 6% on work performed after January 1, 2020. This has been known since June 2019, so even if there were such a requirement for 6 months’ notice (there isn’t by the way), the requirement would have been met anyway. In addition, there are salarying caps on earned income that are new for Tier 1, and reduced for Tier 2 and 3. These are proving to be complicated to implement ,but PERS has an administrative rule in place to implement the salary capfor all three tiers effective with earnings after January 1, 2020. Again, this too has been known since June, 2019. Finally, this is the year that mandatory review of the assumed rates and actuarial equivalency factors takes place. PERS has completely the review and has kept the assumed rate and the actuarial equivalency factors at their current rates.
Thus, there is nothing new taking place in December that I can see,but I am far from perfect in decoding something on the agenda disguised as a trojan horse. If you can point me to a specific item in the agenda, or in the associated Board packet that confirms your assertion, I would be happy to follow up with my contacts at PERS and within the government community.
Finally, do be aware that the big issues from SB 1049 (IAP contribution redirection and the salary, are the subject of major litigation filedby the PERS Coalition in early August, now destined for a Special Master beginning in the first quarter of 2020.
This change to assumptions for Tier 1 employees has been kept a secret by PERS. When I first read about it, I asked a PERS representative about it, and he said it probably has to do with side account calcuations, but I should contact PERS about it. Since nobody seemed to be worrying about this PERS agenda item, I assumed everything was OK, and that my account was safe for a couple of years.
As I just learned this was not so! I just happened to inquire about retirement estimates for early 2020, and a PERS employee replied to my email enquiry that my benefit estimates might change depending on the Dec.6th Board meeting vote. In another response from PERS yesterday from someone named Marjorie, I was informed that the Board thought the changes in assumptions were "inconsequential", as the losses would probably be able to be made up in 3-4 months more of working. This is the same length of time that PERS stated it would take for members to make up the .3% cut to the assumed rate in 2017.
PERS is being sued for a couple of things, like the cap. It sure looks like PERS has been trying to vote on new assumptions for Tier 1 members in an opaque way, as it has not been explained in any Board materials. I only found out about this because an employee told me that my benefit estimates would change in 2020, and I asked why that would be so.
PERS has kept this off the record. Please do follow up.
I can forward the email I received from PERS about this yesterday.
Please do look into this matter.
Meanwhile, I am taking time away from work to prepare my PERS retirement application to get it in before the Thanksgiving holiday.
Thanks
LK
I can get no confirmation for this, and would greatly appreciate you forwarding me a copy of what you received from PERS. I have inquiries in to PERS Senior management team, but have not yet gotten a response.
Also, when did you “first read about it” and where?
I sent the message to you at mrfearless47@aol.com earlier today. Is this a good email address? I didn't find a way to attach email items to you in your blog.
I first read that there would be a change in Tier 1 benefit estimates in 2020 in an email from PERS Member Services. I forwarded the messages to you this morning to the aol address that I construed from your blogspot contact address.
In one of the messages in the thread I sent, PERS states that information about the change in assumptions is in the October 2019 PERS Board packet.
I am in communication with the SEIU representative on the PERS Board. He said that the AEF changes apply to Tier 1 and Tier 2, not just Tier 1 as I was informed by someone else at PERS.
Interesting. I had no idea that PERS can grab money from members so easily.
Thank you.
I have never had an AOL email address. Send your message to feldesmanm at gmail dot com.
@tk, see my newest blog post above, called PAY ATTENTION.
Sorry I originally posted this in the wrong blog feed.....
mfearless....I just received the latest edition of PERS News and I am more confused than EVER!! I am retired P&F since January 1, 2018, Tier 1, retired at 52. I have been working 20 hours a week +/- at the office (parole & probation) since the day I retired. Never going over the 1040 hour annual limit. My boss and I have have been very interested the removal of the 1040 limitation because the office is short handed and my help is invaluable to them. I can't tell if I can work over the limit or not! I have printed out all the rules and changes and they seem to contradict each other. Can you help me understand if I can or if I can't work over the 1040 hour limit. From what I am understanding it appears I can't because I didn't separate from the employer for a full 6 months. I am also concerned about wording in 459-017-0060 Section 2 (A) states "for retirees who have not reached full retirement age under the Social Security Act the annual compensation limit is $17,640".....what the heck does that mean? I am making more than twice that working part-time......now I'm kind of freaking out.....any clarity you can provide would be appreciated. Thanks
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