1422 - Other Post-Employment Benefits (OPEB) Prefunding (Historical View)

Status: Active

Change Notes

Resource updated: Added link to PML 2016-027.

Category

Benefits and Insurance

Audience List

• Accounting Officers
• Chiefs of Administration
• Personnel Officers
• Personnel Transactions Staff
• Personnel Transactions Supervisors

Synopsis

This policy

• explains the application of prefunding Other Post-Employment Benefits (OPEB).

Introduction

OPEB addresses unfunded retirement health care by prefunding future health benefits for retired members.

Statement

Prefunding OPEB is negotiated through the state collective bargaining process.  The bargaining units that have negotiated OPEB prefunding and the process to administer OPEB for these employees are described below.

• Bargaining Unit 2, effective date July 1, 2017.
• Bargaining Unit 5, effective date July 1, 2009.
• Bagaining Unit 6, effective date September 1, 2016.
• Bargaining Unit 7, effective date July 1, 2017.
• Bargaining Unit 9, effective date July 1, 2017.
• Bargaining Unit 10, effective date July 1, 2017.
• Bargaining Unit 12, effective date July 1, 2013.
• Bargaining Unit 16, effective date July 1, 2013.

OPEB General Information

All employees eligible for health benefits, including Permanent Intermittent (PI) employees, must contribute.  If a PI employee has begun contributing towards retirement but is currently not eligible for health benefits, the employee will continue to contribute towards OPEB.  Employees who are not CalPERS members, including Part-time, Seasonal, and Temporary (PST) retirement program members, will not contribute.  Employees who are not subject to OPEB prefunding due to their tenure and time base will contribute when they attain eligibility for health benefits.   New hires and state employees appointed to positions in bargaining units that contribute towards OPEB will begin contributing immediately, unless they are not eligible for health benefits based on the tenure and time base of their appointment.

OPEB contributions are withheld on a pre-tax basis, except for employees receiving disability benefits that require the contributions to be withheld post-tax, as determined by the State Controller's Office (SCO).

For employees that hold an appointment that contributes towards OPEB and an additional appointment in a bargaining unit not contributing towards OPEB, the deduction will only be withheld from the appointment that contributes towards OPEB.

OPEB contributions are not recoverable under any circumstances by the employee or his/her beneficiary or survivor.

The costs of administering payroll deductions and asset management are deducted from the OPEB contributions and/or OPEB account balance.

OPEB Contributions from Base Salary (BUs 5, 12, and 16)

The following parameters pertain to withholding OPEB contributions from the base salary:

A.  The OPEB contribution will be applied monthly regardless of the employee’s pay frequency (e.g., monthly, semi-monthly, bi-weekly).

1. For positive pay employees paid monthly, the OPEB contribution will be based upon the hours paid the previous month.
2. For positive pay employees paid semi-monthly, the OPEB contribution will be based upon the hours paid the previous month and will be taken from the second warrant during each monthly pay period.
3. For positive pay employees paid bi-weekly, the OPEB contribution will be based upon the hours paid for the previous month.

B.  OPEB contributions are not reduced due to fluctuations in gross salary, such as when unpaid leave is taken under the Family Medical Leave Act (FMLA).

C.  For employees with a single hourly appointment, the OPEB contribution is withheld up to the amount that would have been withheld if the employee worked in a full-time appointment.

D.  For employees with a full-time appointment and an additional appointment (e.g., hourly), the OPEB contribution is withheld from the full-time appointment only.

E.  For employees with multiple part-time or hourly appointments, the OPEB contribution is taken from all of the appointments, up to the amount that would have been withheld if the employee worked in a full-time appointment.

F.  If an employee has multiple hourly appointments, the highest salary rate is used to compute what the OPEB contribution would be if the employee held a full-time appointment at that salary rate.  This amount serves as the cut-off.  For employees with a part-time and an hourly appointment, the OPEB contribution amount is calculated based upon the part-time appointment salary rate.

OPEB Contributions From Pensionable Compensation (BUs 2, 6, 7, 9, and 10)

OPEB contributions will be taken from the total pensionable compensation of each pay period.  Pensionable compensation is any pay that is subject to retirement contribution, e.g. regular pay, Industrial Disability Leave, holiday pay, pay differentials, shift differential, and special pay.

OPEB Deposits

OPEB contributions will be deposited in the designated state subaccount for each bargaining unit in the Annuitant's Health Care Coverage Fund.

The OPEB contribution on the employee pay warrant is indicated as “CERBT,” which stands for the “California Employers' Retiree Benefit Trust.”

Departments that process their own payroll and are not part of the SCO Uniform State Payroll System submit OPEB contributions to the California Public Employees’ Retirement System (CalPERS) OPEB fund, CERBT in the following manner:

• Monthly transfer contributions are not required.  The minimum OPEB contribution amounts must not be less than $5,000 or the total annual contribution of the department, whichever amount is lower.
• OPEB contributions may be transferred electronically or by check to CalPERS.  The links to the “Employer Contribution By Check Under Agreement and Election to Prefund Other Post-Employment Benefits” and “Employer Contribution By Electronic Funds Transfer (EFT) Under Agreement and Election to Prefund Other Post-Employment Benefits” forms are under the forms section of this policy.  The appropriate form must be submitted with the wire transfer or check contributions.
• For Bargaining Unit 12, the CERBT Account Number is 5402440716-003 and agreement effective date is 8/23/2010.  The CERBT Account Number is used on the OPEB contribution transmittal forms to identify the proper account to apply the contribution.
• For Bargaining Unit 16, the CERBT Account Number is 5402440716-002 and the agreement effective date is 8/23/2010.

Application

Authorities

• Bargaining / Contracts
• Government Code sections 22940 to 22944.5

Resources

Forms

• CalPERS PERS01F0030 DMC - Check: Employer Contribution By Check Under Agreement and Election to Prefund Other Post- Employment Benefits
• CalPERS PERS01F0030 DMC - Wire Transfer: Employer Contribution By Electronic Funds Transfer (EFT) Under Agreement and Election to Prefund Other Post-Employment Benefits

PML

• PML 2013-025: PML 2013-025 - 8/9/2013 - Bargaining Unit 12 and 16 Other Post-Employment Benefits (OPEB) Prefunding
• PML 2013-033: PML 2013-033 - 10/1/2013 - Instructions for Departments that Submit Other Post-Employment Benefits (OPEB) Contributions Directly to CalPERS
• PML 2014-042: PML 2014-042 - 11/7/2014 - Bargaining Units 12 and 16 Other Post-Employment Benefits (OPEB) Prefunding—Participation and Payroll Deductions
• PML 2016-027: Other Post-Employment Benefits (OPEB) Prefunding Implementation–Bargaining Unit 6 – 10/6/2016

Authorized By

Contact Person

Angela Acker
Health Policy Analyst, , Health Policy
Phone: 916-322-9795
Fax: 916-322-3769
Email: angela.acker@calhr.ca.gov

Superseded Policies