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2705 - Disability Retirement

Category

Retirement

Audience List

  • Agency Secretaries
  • Agency Undersecretaries
  • Department Deputy Directors
  • Department Directors
  • Examination Officers
  • Personnel Officers
  • Personnel Transactions Supervisors

Synopsis

This policy:

  • Describes roles and responsibilities in coordinating an employer-initiated disability retirement.
  • Defines the employer noticing requirements.
  • Describes the employer responsibilities in the Temporary Disability Allowance (TDA) process.

Introduction

Under certain circumstances, appointing authorities may apply for disability retirement on behalf on an employee and, when appropriate, place the employee on involuntary leave (IL) upon filing an application for disability retirement.  Employees who exhaust their leave credits and program while on IL may receive a Temporary Disability Allowance (TDA).

The disability retirement process requires coordination between several departments: the State Personnel Board (SPB), the Department of Human Resources (CalHR), the State Controller's Office (SCO), and the California Public Employees Retirement System (CalPERS).

Statement

If an appointing power, after considering the conclusions of a medical examination provided for by the employee’s physician and other pertinent information, concludes that the employee is unable to perform the work of their present position or any other position in the agency, and the employee is eligible and does not waive the right to retire for disability, the appointing power shall file an application for disability retirement on the employee’s behalf.  Application on behalf of the employee may occur when the employee is already on a leave of absence, but the employee must be eligible and must not waive the right to retire for disability retirement.

Notice Requirement

A department is required to provide 15 days advance written notice to the employee of its intention to apply for disability retirement on his or her behalf.  All documentation pertaining to the appointing authority's decision to apply for disability retirement on the employee's behalf must be provided to the employee.  If the employee requests, he or she shall be provided a Skelly meeting prior to the effective date identified by the employer for disability retirement.  An additional five days should be added to the 15 days of notice to provide time for mailing and processing service.  The employee must be given a reasonable opportunity to respond to the appointing power prior to the appointing power filing the employee's application for disability retirement and placing the employee on IL.

The employer must notify the employee that the department is going to apply for disability retirement on the employee's behalf.  In the notice letter, the appointing power may also inform the employee that he or she will be placed on IL at the end of the notice period.  The notice letter should provide the employee with information regarding a request for a Skelly meeting, available benefits, leave credits, his or her eligible program, and if applicable, a temporary disability allowance (TDA).

The employee's options include:

  • Requesting a Skelly meeting.
  • Using available leave credits.
  • Continuing on his or her eligible leave program.
  • Obtaining information regarding CalPERS retirement beneficiary options or other CalPERS options.
  • Continuing on his or her voluntary deductions while receiving TDA payments.

The employee shall be given a reasonable opportunity to respond and make an election to receive payment for available leave or participate in his or her current eligible program.

The notice letter should request the employee to make an election and respond by a specified date.  If the employee does not respond, an effort should be made to contact the employee to determine the employee's preferences as to retirement.

Temporary Disability Allowance, Programs, and Leave Credits

In order for the employee to receive an estimated TDA, he or she must elect to use available leave and/or participate in his or her current program, e.g., sick leave, vacation, annual leave, Industrial Disability Leave (IDL) with supplementation, Non-industrial Disability Insurance (NDI), and State Disability Insurance (SDI).  If the employee's leave credits and programs are less than the estimated TDA, the employee shall receive a supplemental TDA payment equal to the employee's estimated TDA.  If the employee has available leave credits or if the employee is on a program and elects not to use his or her leave credits or continue on the existing program, the employee is placed on IL status; however, the employee is ineligible to receive TDA payments.  Employees who have exhausted their available leave credits and/or program are eligible to receive the estimated TDA.

Leave Credits

If the employee elects to use available leave credits, it shall be considered regular pay.  For example, if the employee receives regular pay and has a qualifying pay period for the month, the employee shall receive full state service credit for seniority purposes, leave credit accruals, and any salary changes in effect.  Payments of the employee's leave credits are subject to mandatory and voluntary deductions.  Mandatory deductions from leave credits include state and federal income taxes, Social Security/Medicare contributions, and retirement contributions.  Voluntary deductions will continue to be deducted from the employee's regular pay unless cancelled by the employee and there is enough net pay to take the deduction.

Programs

Employees receiving payments for an available program, like IDL with supplementation, NDI, or SDI shall be subject to the provisions of the program and receive all the benefits the program provides.

TDA Payments

TDA is an interim allowance paid to the employee while a decision for disability retirement or industrial disability retirement is being made.  Employees who are disabled/industrial retired typically do not have voluntary deductions taken from their retirement benefits unless approved by CalPERS.  Therefore, the employee should be given the opportunity to cancel any voluntary deductions.

TDA payments are subject to mandatory deductions.  Mandatory deductions from TDA include state and federal income taxes and Social Security/Medicare contributions.  Retirement contributions shall not be deducted from the employee's earnings nor will the employer share be made, as service credits are not accruing toward retirement when the employee is receiving TDA payments.  The employee's union dues/fair share fees shall continue to be deducted from the TDA payments.

An employee may be eligible to receive TDA in addition to being paid for leave credits and/or a current eligible program (this will apply when the employee's leave credits and programs are less than the estimated TDA).  In this case, the employee will only receive applicable credit for leave credits and/or the program.  For example, if the employee's leave credits provide a qualifying pay period for the month, the employee shall receive full state service credit for seniority purposes, leave credit accruals, and any salary changes in effect.

An employee who is receiving TDA payments without payment of leave credits and/or programs is considered to be on a temporary separation.

Health, Dental, and Vision Benefits

The appointing power shall continue to make all employer contributions to the employee's health, dental, and vision plans.  The employer's contributions for health, dental, and vision will continue to be paid when the employee receives payment for leave credits, when the employee is on an eligible program, or when the employee is receiving TDA payments.  If no other payments are being made to the employee, departments are required to continue the employee's health, dental, and vision benefits.  To request continuance of the employee's health plans the appointing power is required to submit a Standard Form 674 to SCO.

The employee is not eligible for vision coverage while retired unless approved by CalPERS.  Therefore, neither the employee nor CalPERS will be required to reimburse the department for the vision deduction amount.

Disability Retirement Denied

If the application for disability retirement is denied, the appointing power shall reinstate the employee to his or her former position with back salary and benefits pursuant to Government Code section 19253.5(g) minus any TDA the employee may have been paid.  An S57V shall be processed to void the IL and return the employee to pay status.  The employee is paid the difference between TDA and his/her salary and restored any leave credits used while on IL.  If the employee's voluntary deductions were cancelled while receiving TDA, the voluntary deductions must be reestablished.

When the employee's disability retirement is denied, the retirement system is not responsible for reimbursing the amount of TDA paid to the employee by the state agency.

Roles and Responsibilities

SPB is responsible for hearing appeals regarding IL.  The employee may not appeal to SPB the appointing power's decision to file the application.  However, if an employee who is placed on an IL contends that his or her appointing power has not complied with the provisions of Government Code section 19253.5, the employee may file an appeal to SPB.

CalHR provides policy provisions relating to the employee's leave credits and programs, e.g., Industrial Disability Leave (IDL), Non-industrial Disability Insurance (NDI), State Disability Insurance (SDI), and health plans during the period of IL.

SCO is responsible for maintaining the employee's employment history and processing the employee's payroll documents.

CalPERS processes the TDA estimate and the retirement application, and provides information on the retirement benefit options available to the employee, pursuant to Government Code section 21419.5.  CalPERS is also responsible for deducting the amount of interim disability allowance made to a state member as provided by subdivision (i) of Government Code section 19253.5.

Application

Retirement Estimate and Retirement Application

The CalPERS Member Services Division provides an estimate of the employee's retirement benefits in order for departments to provide TDA to the employee.  The CalPERS Disability Unit processes the employee's disability retirement or industrial disability retirement application, and the employee's benefit options.  The appointing power is responsible for contacting the CaIPERS Member Services Division for the disability retirement estimate.  Once an estimated amount is determined, the appointing power submits the disability retirement application to CaIPERS Disability Unit.  When submitting the estimate request form, the employer should do the following:

  1. Indicate clearly on the top of the estimate request in red: "Employer Originated Application."
  2. Enter a retirement date.  The employer can use the first of the month the application is going to be sent to CalPERS.
  3. Specify where the estimate is to be sent (employer's address); otherwise, it may be sent to the employee.

The departmental personnel office is responsible for providing CaIPERS with the employee's retirement date, beneficiary, birth date, and survivor continuance information.  The employer must notify CalPERS of the estimated amount of TDA payment(s) they will be making, when the payments will commence, and the frequency of payments (e.g., monthly, semi-monthly, bi-weekly) so CaIPERS will know how the employee is being paid.  This information should also be sent to the employee at the same time.  In addition, the employer should provide CalPERS with a departmental contact person's name and telephone number.  The contact person is typically the Return to Work Coordinator.

When the employer sends the disability retirement application, the following information is needed for processing:

  1. Date when employer will begin TDA payments.
  2. The amount of the TDA payment.
  3. How often the employer will pay TDA (e.g., monthly, semi-monthly, bi-weekly).
  4. An address where the employer wants the reimbursement sent (if disability retirement is approved).

Employment History/Payroll Processing

Departmental personnel offices have the responsibility for documenting the employee's employment history and requesting the employee's pay and benefit coverage from SCO.

In order to request TDA payments, the employee is placed on temporary leave.  To place an employee on temporary leave, the department is to process an S57 transaction with Item 957, Code 19.  This process is used when the employee has exhausted his or her leave credits and/or program, or if the employee elects not to use leave credits or to participate in a program (forfeiting his or her TDA).  The S57 transaction temporarily removes the employee from the payroll.  TDA payments must be requested by submitting a Standard Form 674 to SCO.

IL should not be documented nor shall TDA be paid if the employee is retiring on a service retirement pending disability retirement.

Disability Retirement Approved

When the employer receives notification from CalPERS of the employee's disability retirement approval, the employer is required to report the amount of TDA paid to the employee/member to CalPERS (if applicable).

In order to report the total amount of TDA to be reimbursed to the employer by CalPERS, the departmental personnel office must request and receive accounts receivable through SCO.  The employer then contacts CalPERS Roll Processing Unit by telephone at 1-888-225-7377 to inform them of the total amount due for the TDA payments.  The employer must provide an address for mailing the reimbursement check.

If the member has received TDA, CalPERS pays the retroactive disability retirement benefits to the employer to reimburse the department for the account receivables established for TDA payments.  If a balance remains, CaIPERS will take a monthly deduction equaling 10 percent of the member's gross allowance to pay off the balance.  CalPERS must be notified if the employee and the agency come to a different arrangement for reimbursement.

The employer reimbursement is completed through a monthly payment process.  The employer will receive a check from CalPERS and a "carrier register" (list) that details the employee's Social Security number, name, and payment amount for each employee represented on the check.  Departments will not receive reimbursement for the employee's vision plan.  The employee/member is not eligible for vision while retired unless approved by CalPERS.  When the account receivables are satisfied or at the close of the tax year, the departmental personnel office is required to report the amount received to the SCO in order to update the employee’s W-2 file.

To place the employee on the retirement roll, the department must process an S57V (if an S57 was processed) to void the employee's temporary separation and a subsequent S71 transaction to document the employee's disability retirement.

The employee's effective date for disability retirement shall be based on the date of the employer's application for disability retirement on behalf of the employee and any leave credits used.  For example, if the employee used leave credits while awaiting the disability retirement decision, the effective date will be after the employee's leave credits are exhausted.

CalPERS Retirement Payments

CalPERS places the employee on the next available retirement roll.

  • Retroactive payments to employees are made on a bi-weekly basis.
  • CalPERS will tax the reimbursement paid to the member. The reimbursement is a deduction from the member's allowance.
  • CalPERS will retroactively apply all health, dental, and other applicable deductions (except vision) as a retiree.
  • If the retirement effective date is after the 10th of the month, deductions will begin the first of the following month.

A deduction is set up to reimburse the employer on the next monthly payment schedule. (The deduction is taken from the member's retroactive bi-weekly check. However, all direct carrier payments are made on a monthly basis.)

Authorities

Resources

Forms

PML

  • PML 2002-005: PML 2002-005 - 1/24/2002 - Involuntary Leave Upon Filing for Disability Retirement

Web Pages

Contact Person

Personnel Services Branch
Personnel Program Consultant, Personnel Services Branch
Phone: 916-323-3343
Fax: 916-327-1886
Email: psb@calhr.ca.gov

Authorized By

Melissa Russell
Chief, Personnel Management Division

History

View History

Table of Contents

1000 - Equal Employment Opportunity

1100 - Selection

1200 - Appointments

1300 - Exempt Employees

1400 - Benefits and Insurance

1500 - Work Schedules

1600 - Third Party Pre-Tax Parking

1700 - Compensation

1800 - Savings Plus

1900 - Bona Fide Associations

2000 - Collective Bargaining

2100 - Leave

2200 - Travel/Relocation

2300 - State Owned Housing

2400 - Employee Recognition

2500 - Discipline

2600 - Layoffs

2700 - Retirement

2800 - Training

2900 - Workforce Planning

3000 - Examination and Hiring

3100 - Drug-Free Workplace