FROM: Amy McInerny, Chief Financial Officer
SUBJECT: Update to Benefits Policy No. 009 (Retiree Payroll Deductions and the Assignment of Benefits)
RECOMMENDATION:
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Approve updates to Benefits Policy No. 009 (Retiree Payroll Deductions and the Assignment of Benefits).
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BACKGROUND:
Benefits Policy No. 009 (Retiree Payroll Deductions and the Assignment of Benefits) was last approved by the Board on September 5, 2013. This policy provides a list of approved payroll deductions that may be taken from retiree benefit payments.
California Government Code Section 31452 provides for a list of permitted deductions that a retirement system can allow for the following purposes:
(1) Paying premiums on any policy or certificate of group life insurance or group disability insurance issued by an admitted insurer.
(2) Paying premiums for a prepaid group medical or hospital service plan.
(3) Paying premiums for a vision care program or dental plan, approved by the board, for the benefit of the retired member or his or her dependents.
(4) Paying premiums on national service life insurance or United States government converted insurance.
(5) Payment for the purchase of shares in or the payment of money to any regularly chartered credit union.
(6) Payment to a charitable organization or a federally chartered veterans’ organization that is approved by the board.
(7) Payments to a recognized retiree organization.
(8) Payment for the purchase of United States savings bonds.
(9) The payment of personal income taxes to the government of the United States or the State of California.
(10) Payment for any retiree benefit programs through the recognized retiree organization. The board may require that this payment be to a single party designated by the recognized retiree organization, either to itself or to a third-party administrator.
SBCERA has several legacy approved deductions which do not fall within those permitted by California Government Code Section 31452, such as those for union/association dues. Staff believes that it would create a burden for these longstanding permitted deductions to be terminated, and while new ones that fall outside those permitted under Section 31452 should not be allowed, the legacy approved deductions should remain within the Board’s approved policy. Additionally, one of these deductions has been renamed from “SBPEA” to “Teamsters” to reflect that organization becoming a chapter affiliate of Teamsters in 2015.
In addition, two previously authorized “deductions” are not really deductions at all and have been removed from the list: Arrowhead Credit Union and Fiscal Federal Credit Union (the latter of which no longer exists). These “deductions” serve to direct a portion of a benefit payment to a separate savings account. Staff can accomplish this by allowing members to identify multiple bank accounts to split a benefit payment by making a minor change within the Pension Gold pension administration system. Staff has worked with Arrowhead Credit Union to facilitate this change, which will be seamless to members and will improve administrative processes for both SBCERA and Arrowhead Credit Union.
Lastly, staff recommends removing the approved deductions for “MDAQMD Retiree Medical Benefit” and “VSP-SACRS Vision Plan” as those are no longer offered and are not needed.
Accordingly, staff recommends that the Administrative Committee recommend Board approval of the updated Benefits Policy 009 as reflected in Exhibit A.
COMMITTEE REVIEW:
This item was reviewed by the Administrative Committee on May 21, 2020; the Committee voted 4-0 to recommend Board approval.
BUDGET IMPACT:
None.
STRATEGIC PLANNING GOAL/OBJECTIVE:
Operational Excellence & Efficiency
STAFF CONTACT:
Debby Cherney
Colin Bishop
Amy McInerny
ATTACHMENTS:
Exhibit A: Proposed Benefits Policy No. 009 (Retiree Payroll Deductions and the Assignment of Benefits) - Redline
Exhibit B: Proposed Benefits Policy No. 009 (Retiree Payroll Deductions and the Assignment of Benefits) - Clean