On April 10, 2023, VCERA mailed a letter to its entire membership regarding the Alameda Decision’s anticipated impact on different categories of members. The correspondence also summarized the court ruling and notified members about the Board of Retirement’s meeting of April 17, 2023, where the Board was presented with a proposed Resolution to implement the “Alameda Exclusions.” The Board also considered a proposed modification to its original October 12, 2020, Resolution that addressed the “PEPRA Exclusions.” Both Resolutions were approved by the Board of Retirement at its April 17, 2023, meeting.
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Updated Pensionability of Pay Codes
Pay codes are used by employers to identify and classify types of pay remitted to employees. Some types of pay are includable in retirement earnings,* as determined by CERL and the Board of Retirement, and some are not. In the Alameda Decision, the California Supreme Court clarified for county retirement systems which categories of pay are excluded from a member’s retirement earnings.
The attachments below contain charts reflecting the pensionability of your employer’s pay codes before and after the Alameda Decision:
- The two files labeled “Impacted Pay Codes” list the pay types that were previously included in retirement earnings but that are now (i.e., post-Alameda) included to a limited degree or excluded altogether.
- The two files labeled “All Other Pay Codes” list pay items that, in general, did not see a change in their pensionability due to the Alameda Decision.**
Because the charts are categorized by membership type, and a majority of the members impacted by the Alameda Decision are Legacy members, it is important to first identify yourself as a Legacy or PEPRA member. If you have questions about a particular pay code, please contact your Human Resources or Payroll representative. If you have questions about the pensionability of a specific pay code that are not answered by these charts, please contact VCERA.
COV Impacted Pay Codes
COV All Other Pay Codes
VRSD Impacted Pay Codes
VRSD All Other Pay Codes
(The “COV” files apply to employees of the County of Ventura, Ventura County Superior Court, Ventura Air Pollution Control District, and VCERA.)
* Retirement earnings are known as “pensionable compensation” for PEPRA members and as “compensation earnable” for Legacy members.
** However, a portion of the pay codes in these lists may not be pensionable if they correspond to payments for services rendered outside of normal working hours (also referred to as “situational pay codes”).
Update on Resolutions Passed by Board on April 17, 2023
On April 17, 2023, the VCERA Board of Retirement adopted two Resolutions regarding the Alameda Decision, each affecting different groups of VCERA members.
Some members are not affected at all. For example, those who retired from VCERA prior to January 1, 2013, will not see any change in their retirement benefits as a result of the Alameda Decision.
Generally speaking, members who joined VCERA prior to January 1, 2013 are “Legacy” members, and those who joined on or after January 1, 2013 are “PEPRA” members. Nearly all of the changes required by Alameda only impact Legacy members. (A limited group of PEPRA members may be impacted if they received payment for services rendered outside of normal working hours.)
| PEPRA Exclusions | Alameda Exclusions |
|---|---|
| Payments for 1) services rendered outside of normal working hours, such as standby pay, call-back pay and shift differentials on overtime; and 2) leave redemptions (vacation buydowns) in excess of what is both earned and payable in each 12-month period. | In-kind benefits not paid in cash that the employee is not able to elect to receive directly in cash, such as 1) leave donations and 2) flex credits in excess of amounts that the employee can receive in unrestricted cash. |
Resolution 1 – The “Alameda Exclusions Resolution”
The first Resolution implemented Alameda Exclusions, which are in-kind, non-cashable benefits, such as: 1) leave donations and 2) flex credits in excess of amounts that the employee can receive in unrestricted cash. The “Alameda Exclusions Resolution” affects members who retired, or will retire, on or after July 30, 2020 (i.e., the date of the Alameda Decision) and earned any of the Alameda Exclusion pay items back to the beginning of their VCERA membership. All affected members (retired, active and deferred) with those pay items have overpaid retirement contributions to VCERA through payroll on those items.
Active and deferred members will receive refunds of any overpaid contributions, with an additional 7.9% annual rate interest, compounded, with the option to receive the refunds as either direct payments or rollovers, where applicable.
Retired members who retired on or after July 30, 2020, have been overpaid monthly retirement benefits if non-pensionable earnings were included in their Final Average Compensation (FAC). The Resolution states that, if the total of the monthly benefits that VCERA overpaid such retirees* exceeds the total of the retirement contributions* those retirees paid to VCERA before retirement, then VCERA will not recoup the net overpaid retirement benefits from retirees. Conversely, if the total of the overpaid retirement contributions* exceeds the total amount of overpaid retirement benefits,* the net difference will be refunded to the retiree.
(*with 7.9% annual compound interest applied)
Resolution 2 – The “PEPRA Exclusions Resolution”
The second Resolution is a supplement and modification to a Resolution that was adopted by the Board on October 12, 2020. The original Resolution applied to both Alameda and PEPRA Exclusions. At the time of adoption, the Board deferred action on paragraphs 3, 6, and 9 of that Resolution in regard to the in-kind, non-cashable portion of flex credits. The flex credits are now addressed in the new Alameda Exclusions Resolution adopted on April 17, 2023.
The supplemental “PEPRA Exclusions Resolution” affects members who retired on or after January 1, 2013, (i.e., the effective date of PEPRA) and who also earned and contributed on any pay items that are PEPRA Exclusions back to January 1, 2013. PEPRA Exclusions include:
- Services rendered outside of normal working hours, such as standby pay, call-back pay and shift differentials on overtime; and
- Leave redemptions (vacation buydowns) in excess of what is both earned and payable in each 12-month period.
Active and deferred members will receive refunds of any overpaid contributions, with an additional 7.9% annual rate interest, compounded, with the option to receive those refunds as either direct payments or rollovers where applicable.
Retired members who retired on or after January 1, 2013, have been overpaid monthly retirement benefits if non-pensionable earnings were included in their Final Average Compensation (FAC). The supplemental Resolution states that, if the total of the monthly benefits that VCERA overpaid such retirees* exceeds the total of the retirement contributions* those retirees paid to VCERA on such non-pensionable earnings from January 1, 2013, forward, VCERA will not recoup net overpaid retirement benefits from retirees. Conversely, if the total of the overpaid retirement contributions* exceeds the total amount of overpaid monthly retirement benefits,* the net difference will be refunded to the retiree.
(*with 7.9% annual compound interest applied)
Alameda Implementation Plan
To carry out the Board’s direction on these matters, VCERA will develop a comprehensive Alameda Implementation Plan that will be shared with the Board, stakeholders, and members in the near future.
Affected members will be contacted with more specific individual information as soon as administratively possible after those calculations are performed. They will also be notified of their calculated amounts, and potential options for ways to receive any funds due to them, prior to VCERA making any future benefit adjustments or issuing any refunds. Affected members will also have an opportunity to administratively appeal any claimed errors with respect to such calculations.
Resolution Regarding Correction of Pensionability of Benefits Under County of Ventura’s Flexible Benefits Program – 4/17/2023
Resolution Regarding Alameda Corrections of PEPRA Exclusions as to Retired Members – 4/17/2023
Resolution Regarding Alameda Implementation to Compensation Earnable and Pensionable Compensation – 10/12/2020
March 27, 2023 Upcoming Board Meeting: Alameda Flex Credit Resolution
At the upcoming March 27, 2023, VCERA Board of Retirement meeting, at 10:00 a.m. Time Certain, the Board will be reviewing a proposed Resolution to implement the exclusion of in-kind benefits per the California Supreme Court’s July 30, 2020, ruling in ALAMEDA COUNTY DEPUTY SHERIFF’S ASSN. v. ALAMEDA COUNTY EMPLOYEES’ RETIREMENT ASSN. The Resolution defines what portion of allowances received under the County’s flexible benefits program may be included in compensation earnable for “Legacy” members (hired before January 1, 2013) if the Resolution is later adopted at the April 17, 2023, meeting.
Historically, for each bargaining unit (i.e. union), the County has provided a Flexible Credit Allowance to all employees in each unit, and deducted an Opt-Out Fee for those employees who chose to opt out of the County-provided medical coverage. More recently (starting in December 2022), some of the units adopted a new Opt-Out Allowance structure. Under this new structure, employees who opt out of health benefits do not receive a Flexible Credit Allowance nor are they charged an Opt-Out Fee; instead they receive an Opt-Out Allowance. The Resolution addresses what portion is pensionable under each of these structures.
These changes would be effective for any Legacy member who retires on or after July 30, 2020.
Stakeholders and members are encouraged to listen in and/or review the materials linked here for a preview of the history and anticipated discussion. VCERA’s fiduciary counsel will be present to review the Resolution in detail with the Board of retirement.
The advance agenda item materials:
Review and Discussion of Proposed Resolution to Implement Changes to Compensation Earnable Resolution in Compliance with the California Supreme Court Decision, Alameda County Sheriff’s Assoc. Et Al., v. Alameda County Employees’ Retirement Assn., Et Al (2020) 9 Cal.5th 1032 (“Alameda”) Following Governor Newsom Veto of Assembly Bill 826, in Advance of Anticipated Action on April 17, 2023.
Staff Letter from Retirement Administrator
Letter from Governor Newsom, Veto of AB 826
Memorandum from General Counsel, dated Jan. 31, 2023
Proposed Resolution for Alameda Exclusions
March 27, 2023 Board Meeting Recap Re: Alameda Flex Credit Resolution
At the March 27, 2023, Board of Retirement meeting, the Board reviewed the pending proposed Resolution Regarding Correction of Pensionability of Benefits under County of Ventura’s Flexible Benefits Program (“Flex Credit Resolution”) in advance of its formal consideration on April 17, 2023. (Links to the materials reviewed by the Board are available below.) The Resolution is to bring VCERA into compliance with the Alameda Decision (“Alameda”), which was issued by the California Supreme Court on July 30, 2020, regarding the pensionability of in-kind benefits that cannot be received in cash. (The Board of Retirement previously adopted a Resolution on October 12, 2020, to exclude the other areas addressed by Alameda, such as stand-by, callback, and other payments for service outside normal working hours.)
If adopted, the Flex Credit Resolution will exclude the non-cashable portion of the County’s Flexible Benefit Allowance from compensation earnable for Legacy members*. The Resolution addresses the pensionability of the flexible benefit credit for both the historical structure and the new structure recently adopted by the County of Ventura.
The PDFs below were developed to assist the Board and VCERA members to better understand the potential impact of this exclusion, and how members can estimate the calculation difference for themselves.
VCERA staff is working to expand communication efforts to both active and retired members in the coming weeks to promote better understanding of the Alameda Decision and its impact.
* General members in Tier 1 and Tier 2 and Safety members in Tier 1 who joined VCERA prior to January 1, 2013 or who were eligible for a Legacy plan due to reciprocity.
The March 27, 2023, board meeting materials:
Staff Letter from Retirement Administrator
Proposed Resolution for Alameda Exclusions
Estimated Impact Presentation & Examples
Estimated Impact Charts
Disclaimer for VCDSA Pension Calculator
It has come to VCERA’s attention that the Ventura County Deputy Sheriffs’ Association (VCDSA) recently released a pension calculator application to its members. VCERA disclaims the accuracy of this pension calculator, as none of the calculations generated by this pension calculator have been tested, reviewed or verified by VCERA. An estimate produced by the VCDSA or any other pension calculator does not create any right to receive benefits under VCERA.
For an official retirement benefit estimate, please complete and submit an official request form to VCERA.
New Federal Tax Withholding Form W-4P Form Starting January 1, 2023
The Internal Revenue Service (IRS) revised the federal tax withholding form W-4P in 2022. VCERA had a temporary grace period but will begin using the revised 2023 version of Form W-4P on January 1, 2023.
If you plan to change your tax withholding at the end of 2022 or beginning of 2023, you will need to use the right form as described below:
- Complete the current Federal Income Tax Withholding Form &
- California State Income Tax Withholding Form if you can submit it in time for VCERA to receive it by no later than December 31, 2022. VCERA must receive your Federal & California State Income Tax Withholding Form by that date for it to be valid. VCERA will reject any Federal & California State Income Tax Withholding Form received on or after January 1, 2023, even if they are received in an envelope with an earlier postmark date.
- Complete the 2023 version of the Federal W-4P if you will be submitting your withholding on or after January 1, 2023. Please wait until January 1, 2023 before submitting the 2023 W-4P form to VCERA as we are unable to process it before that date. For changes to your California taxes, a DE 4P form will be required effective January 1, 2023.
Refer to IRS Publication 15-T available at www.irs.gov for more information about the redesigned federal tax withholding form. You may also obtain a copy of Internal Revenue Service Publication 575 (“Pension and Annuity Income”) or visit www.irs.gov for more information on the taxation of your retirement benefit.
VCERA cannot provide you with tax advice regarding the taxation of your retirement benefit or federal or state tax withholding. If you have questions, please consult with a professional tax advisor.
2023 Cost-of-Living Adjustment (COLA)
The 2023 cost-of-living adjustment (COLA) for eligible retirees, beneficiaries and other payees with a retirement date of April 1, 2023 or earlier will be reflected in retirement benefit payments on April 28, 2023:
- Safety retirees and General Tier 1 retirees: 3.0%
- General Tier 2 and Tier 8 retirees (SEIU service): 2.0%
COLA increases under Board of Retirement Regulation are automatic under the terms of the Regulation and applicable labor agreement, and require no additional Board approval.
The COLA awarded to Safety retirees and General Tier 1 retirees is based on the year-over-year change (as of December) in the Bureau of Labor Statistics’ Consumer Price Index (CPI) for the Los Angeles-Long Beach-Anaheim region. If the CPI change, after being rounded to the nearest half percent, is more than the 3.0% COLA maximum, the excess will be “banked” and applied to a COLA in a future year when the annual CPI change is less than 3.0%. The regional CPI change from December 2021 to December 2022 was 5.0%.
The COLA awarded to General Tier 2 and Tier 8 retirees previously represented by SEIU is a fixed 2.0%. This percentage is not subject to CPI changes and only applies to “SEIU service” rendered on or after March 16, 2003 (for retirements on or after March 13, 2005).
If you would like to learn more about VCERA’s annual COLAs, click here or contact VCERA.
Excluded PEPRA pay codes
On April 19, 2021, the Board of Retirement approved to ratify staff determination on pay codes impacted by the October 12, 2020, Resolution regarding Alameda implementation for compensation earnable and pensionable compensation.
The attached list of pay codes reflects those used for the pay items that are not pensionable under the Resolution’s criteria.
July 26, 2021 Board of Retirement Resolution Re: Flex Credit
On July 26, 2021, the VCERA Board of Retirement adopted a Resolution regarding the flexible credit benefit amount that may be included in compensation earnable for “Legacy” members (hired before January 1, 2013).
Prior to the 2020 Plan Year, the County of Ventura’s flex credit benefit was provided in the same amount to all eligible employees within each bargaining unit. However, beginning January 1, 2020, employees In many bargaining groups were offered a “three-tiered” flex credit based on the number of dependents they were covering.
SEIU Example
Calendar Year | Flex Credit ( EE Only) | Flex Credit ( EE + 1) | Flex Credit (EE + Family) |
|---|---|---|---|
| 2019 | $447 | ||
| 2020 | $447 | $522 | $547 |
| 2021 | $472 | $572 | $642 |
The July 26 Resolution limits the portion of the flex benefit amount that is pensionable for Legacy members to the employee-only amount to ensure that all members in the same group or class within each bargaining unit have the same amount reported as compensation earnable (and will pay the same amount of retirement contributions), regardless of their personal circumstances. As a reminder, none of the flex credit is pensionable for PEPRA members.
While the tiered approach to flex credit began in 2020, action to limit the pensionable amount to the employee-only tier was delayed by VCERA following the landmark California Supreme Court “Alameda Decision.” This ruling addressed the pensionability of several categories of compensation, one of which was in-kind benefits such as flex credit. The Alameda ruling said that a retirement board does not have the discretion to include in compensation earnable in-kind benefits, which are benefits that cannot be received in cash. In October of 2020, the Board of Retirement adopted a Resolution to implement Alameda, opting to defer any exclusion of flex credit (paragraphs 3, 6 & 9 of the Resolution) and to pursue a declaratory relief action in Court to determine if exclusion of the non-cashable portion of flex credit was mandatory. The County demurred on the flex credit cause of action, asserting that there was no justiciable controversy because the Board had not taken action to exclude. The Court sustained that demurrer without leave to amend.
While the declaratory relief filing was progressing, both the County and the Service Employees International Union (SEIU) made efforts to pursue legislation designed to allow full inclusion of flex credit in Ventura County. An SEIU-sponsored bill, AB 826, is currently in the California legislature.
AB 826 does not address the recent unequal tiered approach of flex, so the Resolution adopted on July 26, 2021, limits the portion of that flex benefit amount that is pensionable for Legacy members to the employee-only amount to ensure that all in the same group or class within each bargaining unit receive the same amount toward their pensions, regardless of how many dependents they have elected to cover through the health care options provided in the County’s Flexible Benefit Plan. This is consistent with the underlying concept of compensation earnable, which is intended to reflect payment for work-related services.
If AB 826 does not pass, the Board will again consider the pensionability of non-cashable flex credit.
To view the July 26 Resolution, click here.