ACSS Secures Refunds of Employee Pension Contributions for S18 and M18 State Safety Retirement Employees

Posted: Nov 30, 2022
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Most supervisory and managerial employees in state safety retirement and related to bargaining unit 18 (S18/M18) will see a refund from the state for a portion of their employee pension contributions paid this year.  The refunds will average approximately $500. 

With the “PEPRA” pension reform legislation from 2012, the state has generally sought to have state employees pay ½ of the “actuarially determined normal cost” toward their pensions.  The employee contribution each month for state safety members is a percentage of the employee’s base salary minus $317.  For years, the percentage for state safety members affiliated with bargaining unit 18 had been 11% of base salary minus $317.  [Employee Contribution = .11 * (Base Salary – $317)]       

In 2021, the actuarial calculations showed that for employees in State Safety Retirement and related to state bargaining unit 18, the retirement normal cost rose by over one percent of salary.  For rank-and-file employees under the Unit 18 Memorandum of Understanding, this meant the employee retirement contribution would rise from 11% of salary to 11.5% of salary effective July 1, 2021.  However, the state did not actually implement the increased employee contribution rate until January 1, 2022.  When the increase from 11% to 11.5% was implemented, it was done for both rank-and-file employees and for S18/M18 employees.  

Outcome of the Delayed Implementation of the Employee Retirement Contribution Increase 
For rank-and-file employees, the state is beginning to collect the six months of retroactive increase by double-collecting the employee retirement contribution over the next six months.  This double collection for rank-and-file Unit 18 employees begins with the November 2022 pay warrant.  

Recently, many S18/M18 employees were informed by their departments that an accounts receivable would also be established to collect the six month retroactive increase from supervisors and managers.

ACSS Responds to Proposed Retroactive Collection of Employee Retirement Contributions
ACSS lawyers researched the issue and wrote to CalHR, alerting CalHR that the plan to collect retroactive employee retirement contributions did not comply with the law for supervisory and managerial employees.  CalHR agreed with ACSS’ position that CalHR did not comply with the statute in attempting to raise the S18/M18 state safety employee contribution rate.  CalHR has therefore agreed not to collect the retroactive employee contributions and to refund the increased collections made thus far in 2022. 

What Can S18/M18 State Safety Retirement Employees Expect?
CalHR has now complied with the notice requirement in the statue allowing it to increase the S18/M18 employee retirement contribution rate.  CalHR will therefore continue collecting 11.5% of base salary minus $317 per month from S18/M18 employees.  CalHR will not collect any retroactive amount for the six-month period from July 2021 to December 2021 from S18/M18 employees.

CalHR will refund .5% of base salary minus $317 for S18/M18 state safety retirement employees for the first eleven months of 2022.  The expected refund checks should range from $480 to $528 (depending on salary), before taxes.  CalHR will work with CalPERS and the State Controller’s Office to generate these refunds.  As ACSS gains insight on the timing of refunds, we will keep impacted members apprised.  

Overall for S18/M18 state safety retirement employees, this means that 17 months of .5% will be either returned or not collected.  ACSS’ action on this matter therefore puts as much as $800 (pre-tax) in the pockets of ACSS members.

If you have questions regarding this employee pension contribution issue, please contact your ACSS Labor Relations Representative.

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