The Omnibus Budget Reconciliation Act of 1990 (OBRA ‘90) required governmental agencies to cover their part-time, temporary, and seasonal (PTS) employees under a retirement plan. This legislation allows governmental organizations to satisfy this requirement by utilizing either Social Security, a Defined Contribution Plan, or a Defined Benefit Plan (such as the one offered by SISC). Effective July 1, 1991, employers had to select one of these three retirement options for their PTS employees. However, such options can be changed at any time.
The SISC Defined Benefit Plan is a Non-Contributory plan. Employees favor this type of plan because the district pays the full cost. This allows greater take-home pay for the PTS employee.
Employers prefer the Plan because of the savings, simplicity, and minimal administrative requirements. SISC has designed an alternative retirement plan that is cost effective, flexible for school districts, and beneficial to both employees and employers. It is a qualified pension plan that provides a cost benefit to the district, while providing an extra source of income at retirement, or a lump sum cash distribution at termination, for part-time, temporary, and seasonal employees.
Highlights of the Plan include:
• One low rate due to grouping all PTS employees into one pool. One large pool also means the rate will be less volatile from year-to-year.
• Minimal administrative expenses because costs are spread among many districts, and documentation is consolidated. One Plan document, one annual valuation, and one letter of determination eliminate the need for districts to incur these costs individually.
• No hidden costs. The contribution rate is the total cost of the Plan. There are NO additional fees for each participant, NO set-up fees, NO monthly base charges, etc.
• Ease of implementation and administration for the employer. No enrollment forms, information is downloaded from your existing payroll/personnel system.
• Flexibility for the employer by providing three implementation options.
• No employee contributions, thereby decreasing costs, paperwork, record keeping, and employee questions.
• No qualifying restraints. Employees are 100% vested immediately upon participation in the Plan.
• Administration is centralized at the SISC office, including collection and investment of contributions, calculation and distribution of lump-sum payments and retirement benefits, as well as mailing of the annual statements.
• Continuing assistance and materials for implementation of the Plan including:
- Sample Board Resolution and Adoption Agreement
- Employee brochures
- Assistance to district payroll/personnel staff
- Presentations to governing boards, employee groups, administrators, etc.
- Sample employee election packets and MOUs to satisfy Gov Code Sec 20306.
Requirements to Join the SISC Defined Benefit Plan:
A district may join the SISC Defined Benefit Plan at any time. Districts interested in taking advantage of SISC’s Plan need to submit the following: • Board Resolution • Adoption Agreement
Contact Lynn LaValley at (661) 636-4602 or lylavalley@kern.org for more information.
Administration:
Once a month, or after each payroll, districts submit a check for the appropriate contribution amount. Included with the check is a report showing employee names, Social Security numbers, wages, and employer contributions for each employee in the Plan. Since administration of this plan is so easy, we have had numerous calls from payroll staff asking, “Is this all I need to do?” Yes, it’s really that simple!
Monthly electronic files are required for benefit computation and the annual valuation. Many county offices are able to provide this service for their districts or have programming set-up so that districts can download the information. Districts from the following counties currently participate in the SISC Defined Benefit Plan: Kern, Inyo, Lake, Los Angeles, Madera, Mono, San Luis Obispo, Santa Barbara, Tulare, San Bernardino, and San Joaquin. Click here for a copy of the file format requirements for the electronic file .
Any questions about joining our Defined Benefit Plan, or from existing member districts, should be directed to Lynn LaValley at (661) 636-4602 or lylavalley@kern.org.