Agenda - Council - 10/09/1990 - Laserfiche WebLink

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Elected officials may join PERA'S Plan will require a 5 percent contribution rate for both participants and their employer_s, Elected officials on thc city, school dis- trier, township and county level will now have thc option of participating in PERA's defined contribution plan (DCP). Under thc 1990 Omnibus Pension Law, elected public officials may join the program which previously covered only public am. bulance personnel. Origina. lly conceived to provide an alternative pensmn program for elected county attorneys, the bill was broadened during the session. This type of retirement plan was seen by many legislators as appropriate for public officials who often spend a relatively short time in public service. Among the provisions of the new plan arc a 5 percent contribution rate for both par- ticipants and their employers. Upon retire- ment, termination, disability or death, participants are entitled to draw on accumu- lated contributions plus any earnings they generate. Elected officials who are presently mem- bers of PERA's Coordinated or Basic plans, if they so choose, will have a one-year period (ending June 30, 1991) to switch to the new plan for coverage of their future elected ser- vice. They may take a lump-sum refund of their member contributions to the Basic or Coordinated plan or leave their contribu- tions with PERA for a deferred annuity that may be drawn when they reach the minimum retirement age. Officials in thc DCP may also make a lump- sum payment into the plan for previous . .. elected service that was not covered by a public or private employer-contributory pe~. sion plan. The purchase cannot exceed thc total amount of member and emplgyer con- ' tributions that would have been payable to the PERA Basic or Coordinated plans based on the salary earned at the time of past service plus 6 percent annual interest. In addition, if the elected official chooses to make such a lump-sum "buyback," his or her employer would pay a portion of the purchase price (not to exceed the employer contribution based on service and salary). Any buyback is subject to federal limits on contributions to a DCP. Also under the new law, elected officials who are members of the PEP,.A Basic or dina. ted plans may purchase prior uncredited service as an elected official ia either plan. This, however, requires the member to pay an amount sufficient to fund the estimated addi- tional future benefits. In order for PERA to estimate the cost of a buyback of service under the DCP, the Basic Plan or the Coordinated Plan, the association will need a list of thc official's earnings by calendar year, planned retirement date, So- cial Security number and date of birth, as well as spouse's name and date of birth.