EARLY RETIREMENT/ SEPARATION FREQUENTLY ASKED QUESTIONS (Faqs)

EARLY RETIREMENT/ SEPARATION FREQUENTLY ASKED QUESTIONS (FAQs)

UPDATED 8/14/20

GOLDEN HANDSHAKE (2-YEAR CALPERS RETIREMENT INCENTIVE) PROGRAM QUESTIONS

Please explain how the CalPERS Golden Handshake program works. 1 Question The CalPERS retirement incentive program adds two years of service credit to each eligible employee. The City is currently contracted with PERS to only offer this program to non-sworn employees. Employees who elect this early retirement program must retire within a time period set by the City Council (which is yet to be determined). Employees are eligible for this program if they meet the following criteria: *Must be an employee with five (5) full years of service with a CalPERS member agency. *Currently (or will be) at least age 50 (Classic miscellaneous members) or 52 (PEPRA miscellaneous nswer members) on the date of retirement, which needs to occur in the defined retirement window (a 90 to 180- A day period to be determined). **Please note: Your retirement formula is based on a retirement age (55 for Classic miscellaneous, 62 for PEPRA miscellaneous). If you are eligible to retire, but have not reached your formula's retirement age, your pension formula will be reduced. Please use this link to learn more about this topic and contact CalPERS with any specific questions. https://news.calpers.ca.gov/how-your-calpers-retirement-is- calculated/

How is my CalPERS retirement calculated? 2 Question Your pension amount is calculated by taking: Service Credit Years X Benefit Factor X Final Compensation = Unmodified Pension Allowance

Service credit is earned on a fiscal year basis, which is July 1 through June 30. If you are paid on a monthly basis, 10 months of full-time employment will equal one year.

Your benefit factor, also known as “age factor,” is the percentage of pay you’ll receive for each year of service credit earned. It is determined by your retirement formula and age at retirement. For example, if you are a Classic non-safety member and are 55 years old or older, your Beverly Hills formula provides for a 2.5% benefit factor. nswer See this CalPERS video for more information on benefit factor. https://youtu.be/MDGWhr6s9TA If you A worked for other CalPERS agencies, you may have different benefit factors for those years of service.

Final compensation is determined based on your membership classification. If you are a Classic non- safety member, generally your final compensation is calculated from your highest 12-month period. If you are a PEPRA non-safety member, generally your final compensation is calculated from your three-year average highest compensation.

If you have particular questions for your individual scenario, please contact CalPERS. For more information and short videos on how your retirement is calculated, please use the link below. https://news.calpers.ca.gov/how-your-calpers-retirement-is-calculated/

How can I estimate my retirement pension? 3 Question

1. You can use CalPERS Retirement Calculator found here https://www.calpers.ca.gov/page/active- members/retirement-benefits/service-disability-retirement/retirement-estimate-calculator OR 2. To run a more specific estimate calculation based on your latest CalPERS data, you can log into nswer your my|CalPERS account A https://my.calpers.ca.gov/web/ept/public/systemaccess/selectLoginType.html OR 3. If you are within a year of retirement, you can also request official estimates to determine what your final benefit compensation will be through my|CalPERS.

I am a Classic member and not yet 55 years of age, if I retire, how will this impact my retirement formula? 4 Question Am I still entitled to the full 2.5% per service credit year? If you are eligible to retire, but have not reached your formula's retirement age, in this case 55, your nswer pension formula will be reduced. Please use this link to learn more about this topic and contact CalPERS A with any specific questions. https://news.calpers.ca.gov/how-your-calpers-retirement-is-calculated/

I am a PEPRA member and not yet 62 years, if I retire, how will this impact my retirement formula? Am I still 5 Question entitled to the full 2.0% per service credit year? If you are eligible to retire, but have not reached your formula's retirement age, in this case 62, your nswer pension formula will be reduced. Please use this link to learn more about this topic and contact CalPERS A with any specific questions. https://news.calpers.ca.gov/how-your-calpers-retirement-is-calculated/

I received the City survey and indicated that I am or might be interested in retiring through this program, 6 Question what is next?

1. After indicating your interest, your respective Department Head was provided a list of all employees who expressed interest to review and determine operational impacts. The City Manager’s Office and Department Heads will then evaluate which job classifications will be offered the CalPERS early retirement incentive (Golden Handshake) option based on an evaluation of operational impacts. 2. City Management will make the final decision as to which classifications will be offered the nswer Golden Handshake. The cost of this will be prepared by Finance and evaluated by an A independent consultant and brought before the City Council for approval. 3. Upon Council approval, a designated time period will be established, which is 90-180 days in length. 4. During this 90-180 day window of time, employees in the eligible job classes need to finalize their retirement paperwork with CalPERS and establish a retirement date and communicate it to their Department Head and Human Resources.

I indicated I was interested in the Golden Handshake option. What happens if my job class is not 7 Question selected?

If your job class is not selected, you will not be eligible to receive the 2 additional years of service credit if Answer you retire. You may still retire without receiving the additional service credit.

Why can’t all employees interested in the Golden Handshake be allowed to retire with this option? 8 Question CalPERS allows employers to utilize this program to reduce budgeted payroll costs by offering this incentive option to voluntarily reduce the work force and labor costs due to impending mandatory transfers, layoffs, or demotions. As part of the program requirements, the City must eliminate a corresponding number of Answer positions from its budget (the same or different positions). Based on an evaluation of positions, services provided, and service levels, City Management will select which classifications are eligible and which positions may be eliminated in order to ensure continuity of City services and operations.

Is there any possibility of increasing the service credits for the Golden Handshake Program? 9 Question

No. The Golden Handshake Program only allows for two additional years of service credit, per section Answer 20903 of the California Public Employees’ Retirement Law (PERL).

How does the timing work for this early retirement program? 10 Question

After City Council approves the designated classifications, they will also designate a period of time between 90 to 180 days in duration, which is the retirement window. This means if you are eligible and nswer electing to retire under this program, you must do so during this designated period of time. For A example, if Council designates the retirement window as October 1, 2020 through December 31, 2020, if you are eligible and electing to retire under this program, you must do so between these dates.

I have worked in a part-time capacity at the City (or other agency) prior to becoming a full-time 11 Question CalPERS member and would like to buy back that time. What is the cost and what do I need to do? You may be eligible to purchase Service Prior to Membership (SPM) service credit if… • You worked for a CalPERS-covered employer as a seasonal, temporary, part-time, or intermittent employee, but were not a CalPERS member. • You are able to provide CalPERS with documentation from your employer certifying your dates of service, hours worked, and earnings information. nswer A Please contact CalPERS for further information on your individual situation.

For information on this and other buy back options, please refer to the CalPERS Service Credit Purchase Options guidance: https://www.calpers.ca.gov/docs/forms-publications/service-credit-purchase- options.pdf

Is this Golden Handshake being offered to sworn (police and fire) employees? 12 Question

No. At present, the City of Beverly Hill’s current CalPERS contract only provides the two-year service Answer credit option to non-sworn (miscellaneous) employees.

If I indicated that I would be interested in the two year option, but this is not granted, can the cash 13 Question option be taken?

Yes, the cash option is available to all employees. Answer

If the offer of a golden handshake is accepted, could that be combined with a cash incentive? 14 Question

No, at present, the City Council has only authorized these separation incentive programs separately. Answer They are not being offered in combination with one another.

Can you provide an example of how the Golden Handshake program would work? 15 Question Employee X joined the City prior to 1/1/2013 and is considered a Classic CalPERS member and has a retirement formula of 2.5% at 55 years of age. Employee X is 55 years old and has 15.0 service credit years with Beverly Hills and CalPERS. This employee’s current retirement formula would be 2.5% * 15.0 nswer service credit years = 37.5% of their single highest year’s compensation. If this employee were to take A the CalPERS retirement incentive, they would receive an additional two years (2.5% * 2 = 5%) or 5% toward their retirement formula. This would result in a total pension formula of 42.5% with the additional service credit.

If I retire, can I be hired back as an annuitant? 16 Question

There are specific criteria that must be adhered to when administering the annuitant program and as Answer such, this will be handled on a case-by-case basis.

New questions below (as of 8/3/20)

If I’m interested in this program, when do I need to start planning for my retirement? 17 Question The City strongly encourage employees to contact PERS as soon as possible to discuss their circumstances and the steps necessary to take with PERS to ensure a smooth transition into retirement, nswer and to contact HR with questions regarding the continuation of health benefits/retiree medical. This A process does take time to complete with CalPERS (at minimum 30-45 days) and if you anticipate retiring this fall or winter, you should be working with CalPERS now on paperwork involved to do so.

CASH INCENTIVE VOLUNTARY SEPARATION PROGRAM QUESTIONS

Is there any possibility of increasing the cash incentive for voluntarily separating? 18 Question At this time, City Council has only authorized the currently proposed cash incentive program which provides 2.5% of your annual base salary for each year and partial year (rounded to tenths) of current, consecutive, and completed City of Beverly Hills service only. The maximum cash out option is 70% of nswer an employee's respective annual base salary (as of June 30, 2020 for full-time employees and the A preceding 12-month base wages paid as of June 30, 2020 for part-time employees; note this is base salary only and does not include bonuses, overtime, or other benefits). The maximum cash out of 70% was selected as it represents the approximate cost to the City for the Golden Handshake program.

How will I be taxed on the cash incentive option? 19 Question

Your cash incentive payment will be treated as a lump sum payment and is subject to the Federal and Answer California supplemental tax rates of 22% and 6.6%, respectively.

I’m not old enough to retire and/or haven’t been with the City for many years, why was I provided the 20 Question survey regarding the cash incentive option? All employees are eligible to participate in the cash incentive option. As the City is unaware of every employee’s unique personal situation, the City wanted to provide this option to all employees, Answer including those not eligible to retire, should they be in the position to or want to separate from City service and receive a cash incentive for doing so.

I have only worked for Beverly Hills for 4 years, but have worked for other CalPERS agencies and have 21 Question an additional 10 years of service credit. How is my cash incentive calculated? The incentive amount would provide you with 2.5% of your annual base salary for each year and partial year (rounded to tenths) of current, consecutive, and completed City of Beverly Hills service only. The maximum cash out option is 70% of an employee's respective annual base salary (as of June nswer 30, 2020 for full-time employees and the preceding 12-month base wages paid as of June 30, 2020 for A part-time employees; note this is base salary only and does not include bonuses, overtime, or other benefits). In this example, the employee would receive a 10% cash incentive based on their annual base salary for their years of service with the City of Beverly Hills as of June 30, 2020.

Will the City provide COBRA for employees who accept the cash incentive? 22 Question Employees separating from City service without insurance may be eligible to purchase their medical insurance through the Consolidated Omnibus Budget Reconciliation Act, also known as COBRA. This nswer act gives employees in certain situations the right to pay premiums for and keep the group health A insurance that they would otherwise lose for up to 18 months. Please contact Human Resources for additional information related to COBRA.

I’m an hourly employee, does this cash incentive apply to me? If so, how would this cash incentive be 23 Question calculated for me? Yes, all employees are eligible to participate in the cash incentive option. The incentive amount would provide you with 2.5% for each year and partial year (rounded to tenths) of current, consecutive, and Answer completed City service. This total percentage would be multiplied by the preceding 12-month base wages paid as of June 30, 2020 to come up with your cash incentive amount. How is annual base salary defined? Does this include bonuses or any other benefits? 24 Question

Annual base salary is your base annual pay, excluding bonuses, benefits, overtime and any other pays. Answer

Is the cash incentive being offered to non-sworn and sworn employees? 25 Question

Yes, this option is being offered to all non-sworn and sworn (police and fire) employees. Answer

Is this cash incentive payout PERSABLE (i.e. will it be included in my pension calculation)? 26 Question

No, the cash incentive is not PERSABLE and would not be considered pensionable compensation and Answer would not be included in your pension calculation.

I received the City survey and indicated that I am or might be interested in separating through this 27 Question program, what is next?

Per my bargaining group’s Memorandum of Understanding (MOU), I’m entitled to receive retiree uestion medical benefits when I have a service retirement from the City. Would I still be eligible to take the 28 Q cash out, retire, and receive my retiree medical benefits?

Yes, when you retire, even if taking the cash incentive, and you meet the requirements of the retiree medical benefit provisions of your Memorandum of Understanding, you would be entitled to receive Answer retiree medical benefits. For specific questions regarding your individual situation, please contact Human Resources.

Will cash outs be paid in 2020 or 2021? For example if one submits paperwork on 12/31/2020 will 29 Question payment arrive in early January 2021? This decision has tax consequences. Cash outs will be paid within two weeks of separation from City service and will be taxed in the year in nswer which paid. If an employee were to retire on 12/31/20, they would receive their cash incentive A payment in 2021. Please check with your tax preparer for further taxation information.

If someone was to take the cash incentive program, does the same time frame apply of 90-180 days? uestion Can it be earlier than the initial 90 days? In other words, once the buyout is complete can the 30 Q employee retire immediately?

The time frame for the cash incentive program is still being developed. It is likely to coincide with the nswer golden handshake period. If it can be accelerated in advance of the golden handshake period, A employees will be notified.

Can you provide an example of how the cash incentive program would work? 31 Question Employee X has worked for the City for 15.0 years and has an annual base salary at the time of nswer separation of $85,000. Their cash out would be $31,875 (total percentage (15 years * 2.5%) = 37.5% * A $85,000 = $31,875). New questions below (as of 8/3/20)

If I accept the voluntary separation program, will my health benefits be extended or do they end at 32 Question the time of separation? If accepting a voluntary separation, your medical insurance will be covered by the City until the end of the following month in which you separate. Your dental and vision benefits will be covered until the nswer end of the month in which you separate. As an example, if your separation date is in August, your A health insurance will be good through September 30th and your dental and vision coverages will be good through August 31st. After expiration of your benefits, all coverages may be extended via COBRA for up to 18 months. If you retire, your medical coverage will automatically continue under CalPERS and be deducted from your monthly pension allowance. All employees accepting a voluntary separation will have a checkout with Human Resources, during which time benefits after separation will be further explained. Please also refer to your respective MOU regarding retiree health benefits.

When would an employee be required to separate from the City if he/she accepted voluntary 33 Question separation? The City Manager's email made it sound like it would be at the end of this year. The City will likely offer the same retirement window for the cash incentive program as will be offered for the Golden Handshake Program, which is currently anticipated to be the Fall to Winter of 2020. The Answer final proposed designated period will be brought to the City Council in September/October 2020 and upon approval would become active.

If you do not accept the voluntary separation and others do, can you still be laid-off? 34 Question If the City does not save enough from the voluntary retirement and separation program, other nswer measures may need to be evaluated, such as furloughs, layoffs, deferred cost of living adjustments, A etc.

Will I have to sign an agreement when I separate from City service? 35 Question

Yes, a separation agreement is being drafted and will be a requirement of receiving the cash Answer incentive.

If you accept the voluntary separation program, can you apply for an open city job at a later date? 36 Question A former employee will be eligible for rehire two years following separation from City service and nswer execution of a separation agreement, except for part-time positions with a maximum of 20 hours per A week.

Will the City provide calculations of what the separation pay will be for each individual before they 37 Question make a decision? You can contact Tatiana Szerwinski at [email protected] in Finance for your current estimated calculation. Final calculations will be provided upon an employee indicating their intent to proceed Answer with voluntary separation. Finance will then review for any outstanding step increases that have not been processed and update your years of service calculation to the date of separation.

For voluntary separation, how long do we have to decide if we want to take it or not? For example, are 38 Question we given a month or so to decide? An employee will be provided 45 days from the date they indicate their interest and are provided the nswer agreement to make a final decision. An employee will be provided with an agreement that outlines A the terms of separation.

GENERAL QUESTIONS

How do you get paid out for vacation and other leave time when you separate/retire? 39 Question Depending on your bargaining group and your tenure with the City (for some accruals), you may be eligible for cashing out your accumulated accruals when you separate/retire. Vacation and Compensatory (Comp) Time are fully cashed out at separation/retirement. Administrative leave is prorated based on your separation/retirement date. Sick leave is cashed out based on individual formulas Answer using years of service and can be found in each respective Memorandum of Understanding here along with details on all accruals and cash out provisions: http://www.beverlyhills.org/departments/humanresources/memorandumofunderstanding/web.jsp.

How will I be taxed on my leave cash outs? 40 Question

Payment of your leave cash outs will be treated as a lump sum payment and is subject to the Federal and Answer California supplemental withholding taxes of 22% and 6.6%, respectively.

If the City doesn’t save enough through early retirement/voluntary separations, what could happen next? 41 Question If the City is not able to sufficiently reduce its payroll budget costs through voluntary programs (Golden Handshake and/or Cash Incentive), the City may need to consider other involuntary options, such as Answer furloughs, layoffs, deferral of negotiated cost-of-living adjustments (COLAs), etc. The City would work with bargaining groups if such further methods need to be pursued.

If I retire, I don’t know what the medical coverage cost would be for me and my family. What options are 42 Question available for me? Depending on your bargaining group and your tenure with the City, you may be eligible for retiree medical benefits, may have participated in the Alternative Retiree Medical Program (ARMP) and received payments in advance of retiring, or you may be receiving contributions into a Retiree Health Savings (RHS) account to be used for medical expenses upon retirement. Please review your respective bargaining group Memorandum of Understanding (MOU) to understand your eligible benefits. All MOUs can be found here: http://www.beverlyhills.org/departments/humanresources/memorandumofunderstanding/web.jsp Answer If you are not eligible for covered/paid retiree medical, you can continue to enroll in CalPERS medical benefits, however, the cost would be deducted from your monthly pension payment. Once you are 65 years old, you will need to enroll in Medicare for medical coverage and should review your eligible coverage prior to reaching this age. Employees can contact Human Resources for further information regarding retiree health benefits. New questions below (as of 8/3/20)

If I indicated that I would be interested in the two year option, but this is not granted for my classification, 43 Question can the cash option be taken? If your job classification is identified as one eligible for the cash incentive program, you may be eligible to nswer participate. The City must take basic operational needs into account when determining which positions A could be eligible for either program.

What type of financial planning resources are available to employees? 44 Question Services are available through ICMA-RC.

For an in-depth view of your financial wellness, consultations with a CERTIFIED FINANCIAL PLANNER™ Professional are available. Your CFP®, Zoran Lozo, CFP®, CLU® Answer CERTIFIED FINANCIAL PLANNER™ Professional 202-527-3387 [email protected]

Contact your Retirement Plans Specialist if you would like assistance with: • Enrolling in your plan • Rollovers into your ICMA-RC account • Investment strategy and how much to save • Distribution options • Pre-retirement checkup

Your local representatives Penny Abbott ICMA-RC Retirement Plan Specialist 202-329-8694 [email protected] Schedule an appointment with your representative.

You may also visit your account at https://www.icmarc.org/beverlyhillsca.html