Fiscal Year 2015 Employer Contribution Rates
FY15 Rates for the PERS/TRS Defined Benefit (DB) and Defined Contribution Retirement (DCR) Plans
The Alaska Retirement Management Board (ARMB) has established Fiscal Year 2015 (FY15) employer contribution rates for the PERS/TRS Defined Benefit (DB) and Defined Contribution Retirement (DCR) Plans. The rates are effective for pay period end dates between July 1, 2014, and June 30, 2015.
- DB Plan rates
- DCR Plan rates
- Pension & OPEB rate split
- HRA Amts & DBUL Calc
- PERS Past Service Cost rate
FY15 Defined Benefit Plan Employer Contribution Rates
In setting the DB Plan rates, the ARMB addressed compliance with Senate Bill (SB) 125 [PDF], the PERS "cost-share" bill. In fiscal year 2008, the bill converted the PERS DB plan to a cost-share plan, like TRS, and provided for one integrated system of accounting for all employers. The bill established one uniform rate of 22 percent for PERS employers, rather than separate contribution rates for each employer. SB 125 amends AS 39.35.255 and repeals and reenacts AS 14.25.070:
- AS 39.35.255 “Contributions by employers” establishes the uniform contribution rate for PERS employers at 22 percent, with the State contributing the difference between total PERS actuarial required contributions and the amount employers contribute at 22 percent of payroll.
- AS 14.25.070 “Contributions by employers” establishes the TRS employer contribution rate at 12.56 percent, with the State contributing the difference between total TRS actuarial required contributions and the amount employers contribute at 12.56 percent of payroll.
The FY15 rates employers will actually pay (Employer Effective Rate) were set at 22 percent for PERS DB and DCR Plans; and 12.56 percent for TRS DB and DCR Plans.
The DB Plan employer rates for the PERS and TRS are outlined in the table below:
|PERS (P)* and (A)*||TRS|
|*P = Peace officers/firefighters
*A = All others
|ARMB Adopted Rate||44.03%||70.75%|
|Employer Effective Rate||22.00%||12.56%|
FY15 Defined Contribution Retirement Plan Employer Contribution Rates
There is no change in the DCR Plan computation for Fiscal Year 2015. The computation is the same, only the rates have changed. Senate Bill 123 [PDF], the "technical clean-up" bill, requires that the PERS and TRS DB rate be applied to both DB and DCR salaries. However, in some cases, the DB effective rate will not be sufficient to cover all required DCR contributions. All DCR Plan employer contribution obligations are required. Employers will pay either the effective rate or the DCR required rate plus the Health Reimbursement Arrangement (HRA), whichever amount is greater.
The DCR Plan employer rates for the PERS and TRS, are outlined in the tables below:
|PERS (P)*||PERS (A)*||TRS|
|*P = Peace officers/firefighters
*A = All others
|Occupational Death & Disability||1.06%||0.22%||0.00%|
|DCR Required Rate + HRA (= DCR Plan TOTAL contribution obligation)||7.72% + HRA**||6.88% + HRA**||9.04% + HRA**|
|Defined Benefit Unfunded Liability (DBUL)||***||***||***|
|Employer Effective Contribution Rate TOTALS||22.00%||22.00%||12.56%|
**Per AS 39.30.370, a rate of 3.00% is applied to the average annual compensation of all employees of all employers in the TRS and PERS. The contribution amount is then converted to a per pay period, per employee contribution amount. Contributions to the employee's HRA account are required for every pay period in which the employee is enrolled in the DCR Plan, regardless of the compensation paid during the calendar year. By definition, the HRA cost is a dollar amount reflected in the table below:
For full-time TRS members who are paid over a period of less than 12 months, the employer will calculate the amount due per pay period by dividing the annual amount by the number of scheduled payments. For example, for a full-time TRS member who receives nine monthly payments the employer contribution would be $217.84 per pay period ($1,960.53 annual cost divided by nine payments).
For all school districts, please note, the prorated calculation of annual HRA contributions does not apply to PERS DCR Plan Noncertificated (classified) School Employees. These employees are NOT eligible to elect the alternate option program (SB9). Once the DRB PERS system is provided the Leave Without Pay (LWP) date for the last day worked for the school year, service is then turned off and HRA contributions are suspended for the summer break.
For TRS part-time employees, the HRA rate is based on the contract percentage worked multiplied by the rate provided in the table above. For example, a 70% employee paid monthly would have a contribution to the HRA of $114.37 per pay period ($163.38 x 70%).
For part-time PERS members, the employer contributes the PERS hourly amount for each hour the employee worked in each pay period until the employer has contributed the annual amount for the fiscal year, illustrated in the table below:
|(PERS part-time members)|
*** The Defined Benefit Unfunded Liability (DBUL) amount levied against the DCR Plan payroll is equal to the employer effective rate minus the DCR Plan total employer contributions. Please examine the following PERS Example for occupation code "A" of semi-monthly payroll, where the gross payroll = $1000.00:
|Retiree Medical Plan||1.66%||16.60|
|Occupational Death & Disability||0.22%||2.20|
|Health Reimbursement Arrangement (HRA)||**||81.69|
|Subtotal Employer contribution||n/a||$150.49|
|Employer Effective Rate (as required by SB 125)||22.00%||220.00|
|Subtotal from above (subtract from Effective Rate)||n/a||-150.49|
|Total Amount posted to DBUL||n/a||$69.51|
Note: Testing showed that in some very rare cases, the amount calculated by eReporting for entry in DBUL may be less than zero (a negative number). In such cases, eReporting will post $0.00 as a DBUL contribution. In no case can the employer contribution to the DBUL be less than zero (a credit).
FY15 Rate Split of Pension and Other Post Employment Benefits (OPEB) Employer Contributions
For purposes of reporting and posting, the rate split between Pension and Other Post Employment Healthcare Benefits is applied to each payroll upon processing by the Division. The tables below provide the rates used to post all employer contributions between Pension and Healthcare.
Below is the rate split for DB PERS and TRS Pension and Healthcare:
|Employer Contribution & Defined Benefit Unfunded Liability (DBUL)||12.54%||9.46%||22.00%|
|Legislative On-behalf (GASB 24 on-behalf payment)||42.41%||0.00%||42.41%|
|Employer Contribution & Defined Benefit Unfunded Liability (DBUL)||7.22%||5.34%||12.56%|
|Legislative On-behalf (GASB 24 on-behalf payment)||212.24%||43.05%||255.29%|
For FY 2015, the legislative on-behalf rate total is not the difference between the above ARMB adopted rates. The legislative on-behalf rate takes into account the full fiscal year 2015 funding provided to PERS and TRS retirement systems by legislative action in SB119 Section 48 [PDF].
For additional information regarding the actuarial determined rates, please refer to the PERS and TRS actuarial valuations:
FY15 PERS Past Service Cost Rate
PERS employers that have terminated a group of employees, a position, or in entirety must still pay the past service cost associated with the terminated positions per AS 39.35.625(a). The fiscal year 2015 Past Service Cost rate is 20.90%.
For questions about employer contribution rates, please contact Christina Maiquis at (907) 465-1845 or via email at Christina.Maiquis@alaska.gov.