City of Corona Calls PARS-designed Early Retirement Incentive an “Effective Tool” to Cut Costs in a Difficult YearCategories: Early Retirement Incentives,Hot Sheets
The City of Corona offered a customized PARS Early Retirement Incentive to employees in the summer of 2011 to help address the City’s fiscal challenges. The PARS incentive enabled top-tiered city employees to retire sooner than they would have otherwise to reduce labor costs in a humane and cost-efficient way.
What was the Design?
- Eligibility: Miscellaneous and Safety employees who had reached the minimum retirement age with CalPERS, had a minimum of five years of service with the City, and were employed in a department or position designated for participation as of July 20, 2011.
- Benefit Level: Each employee could select from a menu of 14 benefit distribution options from lifetime to fixed-term payouts as short as 5 years (guaranteed payout and can be rolled over to an IRA).
What were the cost savings?
Once the enrollment window closed in September 2011, PARS submitted an analysis to the City showing the following savings:
|Employee Group||Projected Savings in Year 1||Projected Savings over 3 Years||Projected Savings over 5 Years|
* Savings less annual ongoing temporary/reclassification savings
How many participated?
|Employee Group||Number of Eligible Employees||Plan Participation||Replacement|
|Miscellaneous||92 Eligible Employees||39 Retirements (40% of eligible group)||3 Positions (8% of Retirees Replaced)|
|Safety||5 Eligible Employees||16 Retirements (64% of eligible group)||1 Position (6% of Retirees Replaced)|
Ultimately, the PARS plan generated savings above and beyond what the City anticipated because of the high participation rates (40% participation of Miscellaneous employees; 64% participation of Safety employees). Along with accomplishing savings of approximately $3.5 million, the City of Corona reduced the need for layoffs and will be able to meet their fiscal and operation goals.
What is the PARS Process?
- Analysis – The PARS Early Retirement Incentive analysis (pre- and post-offer) helps the agency quantify, in an understandable way, the real costs and savings associated with the plan, and fully discloses all assumptions.
- Design – We custom design the program to best fit your needs and objectives.
- Implementation – PARS provides all administrative support to eligible employees, including orientation meetings, workshops, enrollment and plan administration.
PARS’ Commitment to Public Agencies
More than 600 cities, counties, and school and community college districts have turned to PARS for custom plan design to meet their operational and fiscal needs. In fact, PARS has implemented more than 180 plans in the last two years alone. PARS does all the “leg work”, including fiscal analysis, employee communication, plan enrollment, legal documents, compliance, and ongoing plan administration to minimize the burden on District staff.
PARS welcomes the opportunity to provide a no-cost analysis based on your agency’s individual circumstances.