HomeMy WebLinkAboutAgenda Report - June 20, 1991 (75)W
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CITY OF LO®I COUNCIL COMMUNICATION
AGENDA TITLE: Federally Mandated Retirement System for Part -Time Employees
MEETING DATE: June 20, 1991
PREPARED BY: Assistant City Manager
RECOMMENDED ACE[ON: The City Council direct the City Manager to explore and
select a qualified retirement program for all employees
not covered by Public Employees Retirement System
(PERS) .
BACKGROUND llqF(R 1AJM- The federal government, as part of its budget balancing
measures last fall, mandated that all state and local
governmental employees must participate in a retirement
plan. If the local agency does not include part-time or
temporary employees in a plan, they must be enrolled in Social Security.
Currently the City of Lodi is not required nor does it enroll part-time
employees in PERS. A a matter of fact, the City's contract with PERS does not
allow part-time employees to be a member. There is legislation wx being
proposed that would allow this, but there are drawbacks to that method of
meeting our requirements.
There are some other alternatives to meeting our requirements other than Social
Security. One option is a program by Public Agency Retirement Systems (PARS) a
joint powers agency which will offer a program at significantly less cost than
Social Security. Another option is to enroll our part-time _mpl oyees in a
deferred compensation plan much like the one we offer our full-time employees.
All of the options are being explored and considered. W believe there are cost
effective alternatives to Social Security. Of course, the best alternative will
be one which offers the employee a secured retirement plan and provides the City
with the most cost effective program which meets the needs of the employee and
the legislation.
W are bringing this to the attention of the City Council to advise them of this
legislative requirement and the alternatives available.
Action must be taken by July 2, 1991. However, final regulations have not been
promulgated. Until these regulations are issued, we do not know which
alternative would be the best.
APPROVED:
THOMAS A. PETERSON
City Manager
CC -1
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Federally Mandated Retirement System for Part -Time Employees
June 20, 1991
The Internal Revenue Service (IRS) has issued interim regulations. The
regulations do give employers some breathing room; they have until the end of
1992 to retro -actively establish a retirement program. The employer, however,
must give indications that:
1) It is reasonable to believe a qualified program wili be established.
2) Affirmative steps be taken to support this belief.
3) The program must be put into effect by the end of 1992.
4) It must cover employees retro -actively to July 2, 1991.
Beginning July 2, 1991 the City will begin deducting an additional 6.2% from the
salaries of part-time employees. This is the amount necessary to cover the cost
of the OASDI portion of Social Security. If an alternate, less expensive, plan
is selected, the difference will be refunded to the part-time employee.
FUNDING: Not applicable
Respectfully submitted,
�e' �t "Oj-9"
WJerry L. Glenn
Assistant City Manager
JLG: b r
Attachment
CCCOM222/TXTA.07A
r-.
RE50LEIUN NO. 91-112
--------------- --- -
A RESOLLTI UN OF THE LORI CITY ClOUNC]L
DIRECTM THE LCUI CITY MANAGER TO EXPLORE AND SELECT A
QUALHM REIIItIlVI N17 PROGRAM FOR ALL EMPLOYEES NOT COVERED BY
THE PUBLIC EMPLOYEES RET]RIlVlM SYSTEM (PERS).
RESOLVED, that the Lodi City Counii hereby directs the Lodi
City Manager to explore and select a qualified retirement program for
all employees not covered by the Public Employees Retirement System
(PERS).
Dated: June 20, 1991
I hereby certify that Resolution No. 91-112 was passed and
adopted by the Lodi City Council i n an adjourned regular meeting held
June 20, 1991 by the following vote:
Ayes : Council Members - Pennino, Pinkerton, Sieglock and
Hinchman (Mayor)
Noes: Council Members - None
Absent: Council Members - Snider
Alice M. Re" the
City Clerk
91-112
RES91112/TY.TA.02J