Published: March 11, 2021
There has been some confusion regarding the role of SCERA in
the administration of the pension plan and specifically the recommendation for
or granting of new benefits, and the characterization of the benefit formulas
negotiated by collective bargaining.
WHAT IS SCERA’s
SCERA’s purpose is to invest trust assets and administer
retirement and survivor benefits to its members and beneficiaries. The benefits are set by statute, and the
benefit formulas are adopted by the participating plan sponsors (employers)
through collective bargaining. SCERA is
not a party to collective bargaining and we do not represent employees. When
asked, SCERA provides cost information on benefit formulas and other elements
of compensation that could impact a retirement benefit.
SCERA is governed by the California Constitution, state law
and regulations adopted by the SCERA Board and approved by the Sonoma County
Board of Supervisors. Under Article XVI,
Section 17 of the California Constitution, the retirement board has a fiduciary
duty to the members and beneficiaries of the plan and is required to act solely
in the interest of, and for the exclusive purpose of:
benefits to participants and their beneficiaries (this is the highest duty);
employer contributions; and
reasonable expenses of administering the system.
These constitutionally mandated fiduciary duties are woven
throughout SCERA’s governance policies.
SCERA’s COLA POLICY
Mandated fiduciary duties are found in the COLA policy which
contains three policy goals:
Maintain reserves sufficient to permit the payment of all
COLAs that have been granted to SCERA retired members and beneficiaries;
Maintain the purchasing power of retirement benefits to the
extent allowable under the ‘37 Act by annually analyzing SCERA reserves to
determine whether the COLA can be fully funded and the funding status
communicated to the Sonoma County Board
of Supervisors; and
Minimize Employer contribution rate increases.
These policy goals align with the Retirement Board’s constitutional
fiduciary duty to administer the plan in the best interests of the members and
beneficiaries by ensuring that any cost of living increase to benefits has a
dedicated funding source before being authorized by the Board of Supervisors.
The COLA statute that SCERA operates under was added to
state law in 2004 through a bill sponsored by the Sonoma County Board of
Supervisors. The purchasing power COLA, by
statute, requires a certain amount of reserves plus the cost of the COLA to be
available before a COLA can be granted by the Board of Supervisors.
SCERA does not have the authority to implement a COLA without
approval from the Board of Supervisors, and SCERA does not make recommendations
regarding a COLA. That’s because
retirement benefits are considered deferred compensation and SCERA is not
representing employees in their employment capacity. SCERA’s role is to administer the plan that
it receives from the employer, not to advocate for increased or different
benefits under the plan.
The benefit formulas in place are:
Member Plan A – Legacy Plan 3% at
Member Plan B – PEPRA Plan 2.5% at
Member Plan A – Legacy Plan 3% at 50
Member Plan B – PEPRA Plan 2.7%
The Legacy plans are on par with other California plans, and
are the most generous formulas offered under the governing law for county
retirement systems operating under the County Employees Retirement Law, like
SCERA. Every public pension plan in
California, except for transit plans, the University plans and other plans
specifically excluded from the Public Employees’ Pension Reform Act (PEPRA) are
required to administer the PEPRA plan for new employees hired on or after
January 1, 2013, with certain very limited exceptions.
SCERA encourages all plan participants to access this
website for information about how the plan operates.