Bill Could Ban Defined Contribution Alternatives to Social Security for Part-Time, Seasonal and Temporary Employees

Categories: California Developments,Hot Sheets
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Cities and counties may have less than one year to move part-time employees out of Social Security as a cost-saving measure

A provision of AB 1248 would prohibit a county or city with part-time, seasonal, and temporary employees in Social Security from moving them into a less costly, commonly used alternative retirement plan with a 7.5% total contribution between employee and employer. The bill’s author says it is his intent to grandfather existing alternative plans as of July 1, 2012 when the bill is considered again next year.  However, as the bill currently reads, those cities and counties with part-time employees still in Social Security may have only a brief window to opt out of Social Security into a defined contribution type alternative plan before that right is taken away in 2012.

The bill restricts local control to negotiate or change part-time employee retirement benefits and costs in the future. California State Association of Counties and League of California Cities were successful in delaying the bill on the Senate floor before the legislative session ended in September. The associations have submitted to the bill’s author a proposed amendment to exempt part-time employees (the bill is primarily focused on Social Security coverage for full-time employees). However, we will not know until 2012 whether the amendment is accepted.

In the meantime, we urge cities and counties that want to consider saving on part-time employee benefit costs, to contact PARS, a leading provider of alternative plans to Social Security, to see if they are eligible.  PARS can provide a free cost savings analysis of transferring part-time, seasonal, and temporary employees out of Social Security and into an alternate plan, based on your city or county’s specific part-time employee payroll data.

PARS currently administers Alternative Retirement System (ARS) trusts serving over 250 public agencies and 270,000 part-time, seasonal, and temporary employees, saving cities, counties, and other local governments millions of dollars, while offering part-time employees a lower-cost, more flexible and portable benefit. Here are some of the key advantages of an ARS plan for your city or county:

  • Lower costs for employers and employees (typically 79% or more)
  • Fixed, employer-controlled costs
  • Immediate vesting
  • Greater participant portability, including cash out or rollover when they leave
  • No costly administrative or regulatory burdens
  • Tax-deferred distribution options for departing employees
  • No financial penalties leaving the program
  • An array of non-insurance investment options

PARS – The Retirement Specialists

Through PARS, public agencies can have the plans they need without assuming administrative, compliance or fiduciary burdens. Our programs includes:

  • Fiscal Analysis
  • Plan Design
  • Safe Trustee
  • Turn-key Administration
  • Investment Management

These are some of the many services available through PARS.  With more than 1,100 qualified retirement plans under administration, PARS is the leader in governmental plan design and administration.

To see if your agency is eligible to switch to our program and for a complimentary analysis that can put you on the road to compensation cost savings, contact PARS.  We look forward to hearing from you!


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