Three California Cities Improve Part-Time Employee Benefit While Cutting Costs!Categories: Hot Sheets
The cities of Moorpark, Stanton and Sunnyvale realize substantial savings with the PARS-ARS Program
When the cities of Sunnyvale, Moorpark, and Stanton wanted to reduce operating costs without impacting services, they turned to PARS to develop a Social Security alternative for part-time, seasonal, and temporary (PST) employees. PARS Alternate Retirement System (ARS) reduces payroll costs by replacing Social Security with a federally approved, legally compliant retirement alternative. ARS actually provides better benefits for PST employees, while reducing payroll costs. These cities could not pass up this money-saving solution.
Terri Marsh, Administrative Services Director for the City of Stanton comments, “The PARS-ARS plan is a big benefit to both us and our part-time employees. The employees have access to their funds immediately, the assets are portable – they can go with them. For the City, it’s simple – we save money.”
How Payroll Costs Were Reduced
Under Social Security, an agency must contribute 12.4% of PST payroll, split equally between employer and employee. But under the PARS ARS Plan, based on OBRA 90, the employer contribution is only 7.5%, and the employer determines the split. The City of Sunnyvale, for example, chose to reduce their contribution from 6.2% to 1.3% for ARS, ultimately saving them 4.9% of their total part-time payroll expenses which represents a 79% savings.
Teri Silva, Sunnyvale’s Director of Human Resources comments, “The PARS program allows us to maintain a recruitment and selection process that ensures a highly competent workforce while maintaining a competitive pay and benefits package for employees. The PARS-ARS provides flexibility for cost sharing of the 7.5% contribution and this allows us to see savings immediately.”
Why Employees Prefer PARS ARS
Though the employees continue their contribution, their take-home pay actually increases because the ARS contribution is made with pre-tax dollars, while Social Security is post-tax. And there are other significant benefits for employees, with no additional costs:
- Benefits are portable, so employees can take their ARS contributions with them when they leave in the form of a cash payout or rollover.
- Employees are immediately vested from the first day of ARS participation.
- Employees get all the money in their PARS account when they retire, not a monthly Social Security allowance based on a set formula.
Why Employer’s Prefer PARS ARS
Aside from the immediate costs savings from reducing their contributions from12.4% to 7.5%, California public agencies also benefit from PARS personalized customer service. Once the PARS-ARS program is adopted, a Client Services Coordinator is assigned to the agency to coordinate orientation of staff and participants and ensure that plans are running as smoothly and efficiently as possible.
Ron Ahlers, Finance Director for the City of Moorpark comments on PARS’ service, “The City has experienced certain difficulties with past providers who have been unresponsive to the needs of the City. PARS provides a direct contact by assigning us a Client Services representative who is not only knowledgeable about our plan but we are able to contact them directly and have a response in a timely manner. PARS is a full-service company that provides for their clients’ needs.”
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