Alameda Corrections Update
The correction process to comply with the California Supreme Court decision in the case of Alameda County Deputy Sheriffs’ Association et al. v. Alameda County Employees’ Retirement Association and Board of Retirement of ACERA (Alameda) is still underway.
Due to the complexity of recalculating benefits, reconciling contributions, and processing refunds, the goal of completing the correction process by June 30 was not reached. However, SCERS continues to make progress on this effort, with more progress expected by the end of the year.
The adjustments apply to Legacy members in Miscellaneous Tiers 1, 2, 3, 4, and Safety Tiers 1, 2, and 3.
For active and deferred members, here’s what’s been completed so far:
- Sacramento County updated its COMPASS payroll system to stop
taking retirement contributions on the newly excluded pay items,
retroactive to August 30, 2020, the date the Court ruling became
final. Those items are:
- Standby pay and any differentials derived from those items
- Animal allowance (also applies to PEPRA members in Safety Tier 4)
- Insurance subsidy offset, paid to certain County employees in January of each year
- The portion of differentials, allowances, or other incentives that include overtime or CTO-expired/CTO-over-max (these pay items were excluded from the COMPASS system after April 2019).
- Sacramento County has adopted policies to ensure that vacation cash-in amounts that can be included in pension calculations do not exceed what can be earned and paid in each 12-month period, whether calendar year or fiscal year.
The analysis of member retirement contributions on excluded pay items from January 1, 2013 through August 29, 2020 is ongoing. SCERS will contact individual members in advance of any corrective action to provide options to receive direct refund payments or to roll over all or part of the refund into a qualified retirement plan (i.e. County 457 Plan).
For members who retired after August 2020, SCERS staff have manually removed excluded pay items from Final Compensation calculations to ensure the pension amount is accurate. Those members may be entitled to retirement contribution refunds.
For members who retired before August 2020, SCERS is finalizing an analysis of wage data for approximately 800 members. Individual notices will be provided to retirees detailing the amount of the correction and recovery process for potential overpayment.
In accordance with the Alameda ruling, the impacts to the retirement benefit can result in one or all of the following:
- Retirement Benefit Adjustments
For those who retired on or after January 1, 2013, your monthly retirement benefit will be recalculated retroactive to your retirement date to reflect what it should have been once the newly excluded pay items are removed from Final Compensation. When the calculation is finalized, you will be paid the new monthly allowance on a going-forward basis.
- Retirement Benefit Overpayments and Recovery – Before and after August 31, 2020
SCERS will recoup any benefit overpayments made on and after the August 31, 2020 payroll consistent with SCERS’ Error Correction Policy. SCERS will not recoup benefit overpayments that occurred prior to the August 31, 2020 payroll, unless ordered to do so by the Internal Revenue Service and/or a final, non-appealable court order.
Such recoupment is not mandatory where, as here, the overpayments were due to interpretative decisions made by the system in the face of unclear law. However, it is mandatory for SCERS to recoup overpayments that occurred after the Supreme Court clarified the law in the Alameda decision.
- Retirement Contribution Refunds (if applicable)
SCERS also will conduct an analysis of over-collected retirement contributions to determine if contribution refunds are necessary. For the most part, no actual refund payments will be made because overpaid benefits will offset refundable contributions and related interest earnings. However, SCERS will refund over-collected member contributions, retroactive to January 1, 2013, to the extent the value of such exceeds the marginal increase in retirement allowances the member received from the excluded pay items.