VCERA is pleased to open a recruitment for a Retirement Accounting Manager. This position will assist the Chief Financial Officer (CFO) in planning, organizing, and directing payroll and fiscal activities at VCERA. To learn more about the job opening and to apply, click on the link below.
On May 20, 2024, the Board of Retirement voted to adopt a 7.9% interest rate on underpaid benefits stemming from Alameda-related corrections. Members who retired on or after July 30, 2020 who had certain estimated exclusions applied at the time of their initial retirement calculation may be affected.
After the Alameda court decision in July 2020, VCERA staff used the information available to recalculate benefits and began excluding certain items from Final Average Compensation (FAC) calculations to comply with the decision. These exclusions that occurred early in the process after July 2020 were best estimates at that time. Since then, more precise numbers have been calculated by the employers and by VCERA, and some of these exclusions have now been reversed. Such exclusions included 1) the removal of all flex credits for VRSD members, which was later determined to be improper because VRSD had reported only the cashable amount of flex credits, and 2) the removal of situational pay codes in full where it was later determined that only a portion of hours reported with the pay code should be removed. As a result of reversing these exclusions, VCERA has, in some cases, identified a new higher FAC period and has recalculated benefits. The recalculations resulted in underpaid benefits owed to the affected retired members. These missed benefit payments will be treated as back-pay.
Following the board’s May 2024 approval, an interest rate of 7.9% will be applied to these back-payments. This is consistent with a March 2023 board decision to apply the same interest rate to other Alameda corrections. The 7.9% interest rate was selected based on average long-term earnings, and also mirrored the quarterly performance report as of December 31, 2022.
In the Alameda Decision, issued on 7/30/2020, the California Supreme Court ruled that retirement boards, such as VCERA’s, could not include in Legacy members’ compensation earnable any pay items that were excluded by law, including “in-kind” benefits. “Flex credit” allowances provided to employees each pay period and applied to healthcare benefits are “in-kind” benefits that must be excluded. Rather than implement that exclusion immediately, the VCERA Board agreed to delay a decision on flex credit until April 2023 at the request of the County and labor organizations, allowing time to negotiate alternative benefits.
In May 2023, after the Board adopted a Resolution to implement the Alameda Decision’s ruling as to flex credit, VCERA began limiting flex credit in Legacy members’ retirement earnings to the “maximum cashable amount,” which was the flat or employee-only rate minus the lesser of the opt-out fee or lowest-cost employer-sponsored healthcare plan. This was the formula under the County’s benefit structure in place at that time, referred to as the “old benefit structure.” After the County changed the program’s structure in June 2023, referred to as the “new benefit structure,” the “maximum cashable amount” for most bargaining units was equal to the opt-out allowance.
The following two sample paychecks illustrate the new benefit structure with regard to opt-out allowances and flex credit allowances for Legacy members.
Example #1: New Benefit Structure with Opt-Out Allowance
“Opt Out Allowance” is the flat amount ($147.00) payable to this employee for not electing a County-provided health plan. [Under the new benefit structure, this employee no longer receives the old “Flex Credit FT $497” amount and no longer pays the “Opt Out” fee.]
“Retirement Earnings Final” is the total pensionable retirement earnings in this pay period. For Legacy members, “Retirement Earnings Final” is what is included as “compensation earnable.” For this Legacy member, it is the sum of all pay items listed under “Earnings.”
“Retirement Cnty Reg Fund” is the amount the County reported paying toward this employee’s future retirement benefit (“normal cost”). The County also includes in this amount a portion of the amortized unfunded liability (UAAL).
“Retirement Cnty COL Fund” is the amount the County reported paying toward this employee’s future cost-of-living adjustments (COLA) (“normal cost”). The County also includes in this amount a portion of the UAAL.
Note: Under the new benefit structure, employees receive either the “Flex Credit” allowance or the “Opt Out Allowance.” There is no longer an opt-out fee. The maximum cashable amount is equal to the opt-out allowance and is the same for all members of the same bargaining unit. (Click here to see charts of maximum cashable amounts by union.)
Note: Effective 6/25/2023, the County began reporting the new benefit structure’s maximum cashable amount in “Retirement Earnings Final” for Legacy members. The pensionable amount varies by bargaining unit. For example, the maximum cashable amount is $229.94 per pay period for VCDSA-represented employees; it is $279.94 per pay period for CNA-represented employees.
Example #2: New Benefit Structure with Flex Credit Allowance
“Flex Credit” is the flex credit allowance ($147.00) for this employee in this bargaining unit.
“Retirement Earnings Final” is the total pensionable retirement earnings in this pay period. For this Legacy member, it is the sum of all pay items listed under “Earnings,” except the “Flex Credit Additional” amount.
Note: The sum of “Flex Credit” and “Flex Credit Additional” amounts equals the flex credit amount negotiated by each bargaining unit. Under the new benefit structure, the “Flex Credit” amount is pensionable, but the “Flex Credit Additional” amount is not pensionable.
Other Information
PEPRA members do not have flex credit included in their retirement earnings because PEPRA excludes from “pensionable compensation” any employer-provided allowance. Also, the “Retirement Earnings Final” amounts on Legacy members’ paychecks prior to 6/25/2023 were overstated due to the inclusion of the full flex credit.
