Pension contribution questions at SFID
In a recent RSF Review article on Mr. Irvin’s retirement as a board member of the Santa Fe Irrigation District (SFID), it was stated, “Employees now pay 8 percent towards retirement…”
This statement requires more scrutiny and is not accurate. After the article was published, I contacted the General Manager at SFID. Here is what I was told and have learned via the SFID agenda published on Oct. 12 for the Oct. 18 board meeting. The board will vote on these items
beforeyou can voice your concerns:
1) Until this July, all employees contributed only 3 percent versus the full 8 percent towards their current generous Calpers pension for retiring at age 55. As a rate-payer, you have been paying the additional 5 percent contribution. Prior to the 3 percent level, employees contributed only 1.5 percent of their salary and you made up the difference as well.
2) As of this July, the General Manager and three other managers began contributing their full 8 percent. All other employees continue to only pay 3 percent.
3) However, in April of this year the General Manager was given a salary increase that off-set his increased July contribution rate. So, rate-payers indirectly are still paying his higher contribution rate via his salary increase.
4) The three other managers who increased their contribution from 3 percent to 8 percent just this July are scheduled for a salary review at the Oct. 18 board meeting. A 5 percent increase is being recommended starting Jan. 1 which, not coincidentally, completely offsets their increased pension contribution.
5) All other employees are covered by a union-style agreement called a Memo of Understanding. They currently pay 3 percent and will eventually get to 8 percent in three years. As detailed in the board agenda package on page 61, employees will receive salary increases that track ahead of their increased pension contributions over the next three years. But it doesn’t stop there. Additionally, they are being guaranteed “stipends” which will be paid monthly in amounts increasing from 2 percent to 5 percent of salary over three years.
On top of these increases, all employees will be able to “opt-out” of healthcare benefits and receive another $500 per month. If you have a working spouse that has healthcare coverage, you can now increase your pay for coverage you don’t need. Historically, it has been reported that this type of “opt-out” option has the potential for abuse when it can affect the “pensionable pay” calculation covered by your employer, a form of pension “spiking.”
If the board passes these proposals, then all of us as rate-payers are really still paying for all employees pension contributions, just via the questionable cover of salary increases, “stipends,” and “opt-out” payments that more than make up the difference.