The Sacramento County Employees’ Retirement System (SCERS) has initiated a correction process to comply with the California Supreme Court decision in the case of Alameda County Deputy Sheriffs’ Association et al. v. Alameda County Employees’ Retirement Association and Board of Retirement of ACERA (Alameda).

As part of that process, Sacramento County has now updated its COMPASS payroll system to stop taking retirement contributions on the newly excluded pay items, retroactive to August 30, 2020, the date the Court ruling became final.

Approximately 500 Sacramento County employees will see retirement contributions reversed (refunded) in their April 2, 2021 pay advices, reflecting the excluded pay items that can no longer count toward retirement calculations.

The changes made in COMPASS remove the following pay items from being considered retirement applicable:

• Standby pay and any differentials derived from those items.
• Animal allowance.
• Insurance subsidy offset, paid to certain County employees in January of each year.

SCERS is continuing to finalize its analysis of retirement contributions on excluded pay items from January 1, 2013 through August 29, 2020, and will issue additional contribution refunds to active and deferred members as applicable later this spring. Refunds also include retirement contributions on the following pay items, in addition to those listed above:

• Vacation Cash-In that exceeds what can be earned and paid in each 12-month period, whether calendar year or fiscal year.
• The portion of differentials, allowances, or other incentives that include overtime or CTO-expired/CTO-over-max (these pay items were excluded from the COMPASS system after April 2019).

SCERS will contact members in advance of the additional distribution to provide an option for members to receive a direct payment for the contribution refund or to “roll over” all or part of the refund into a qualified retirement plan (i.e. County 457 Plan).

Information for Retired Members

SCERS is finalizing an analysis of wage data and intends to begin processing retirement benefit adjustments later this spring for approximately 800 members.  An individual notice will be provided to retirees detailing the amount of the correction and recovery process for potential overpayment.

In accordance with the Alameda ruling, the impacts to the retirement benefit can result in one or all of the following and are described below: Retirement benefit adjustments, retirement benefit overpayments and recovery, retirement contributions refunds.

Retirement Benefit Adjustments

If you retired on or after January 1, 2013, your monthly retirement benefit will be recalculated retroactive to your retirement date to reflect what it should have been once the newly excluded pay items are removed from Final Compensation. When the calculation is finalized, you will be paid the new monthly allowance on a going-forward basis.

Retirement Benefit Overpayments and Recovery – Before and after August 31, 2020

SCERS will recoup any benefit overpayments made on and after the August 31, 2020 payroll consistent with SCERS’ Error Correction Policy. SCERS will not recoup benefit overpayments that occurred prior to the August 31, 2020 payroll, unless ordered to do so by the Internal Revenue Service and/or a final, non-appealable court order. Such recoupment is not mandatory where, as here, the overpayments were due to interpretative decisions made by the system in the face of unclear law. However, it is mandatory for SCERS to recoup overpayments that occurred after the Supreme Court clarified the law in the Alameda decision, which became final on August 30, 2020.

Retirement Contribution Refunds (if applicable)

SCERS also will conduct an analysis of over-collected retirement contributions to determine if contribution refunds are necessary. For the most part, no actual refund payments will be made because overpaid benefits will offset refundable contributions and related interest earnings. However, SCERS will refund over-collected member contributions, retroactive to January 1, 2013, to the extent the value of such exceeds the marginal increase in retirement allowances the member received from the excluded pay items.

For more information, click here.

If you have questions, please contact SCERS at 916-874-9119 or sacretire@saccounty.net