| Part Two Lump Sum Payment Reversal - LSP Backout and Re-entering |
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Frequently Asked Questions (FAQs)
Recently several additional questions related to HB2189 and lump-sum payments have been asked by employers. Because other employers may have similar questions, here are the questions asked and the corresponding answers.
Q1) On May 19, 2006, PERS asked employers, who anticipated difficulty recovering Tier One/Tier Two member-paid contributions on LSP back-out amounts, to delay those recovery efforts while PERS explored strategies to aid employers in that recovery. Recently PERS posted FAQs on the lump-sum topic and reminded employers to report LSPs and their contributions “…in an accurate and timely manner.” Has PERS’ direction changed?
A1) No. PERS employers may elect to delay reporting retroactive LSPs and their contributions until PERS’ strategies are finalized. You may also choose to report and pay now. If you report and pay now and the Board approves use of the Contingency Fund to cover those contributions, we will determine a method to reimburse employers for the contributions charged when the lump sum amounts are re-entered.
Q2) Recovery of member-paid contributions on retroactive LSPs may impose large financial burdens on some PERS employers. Therefore, employers who pay PERS remittance by ACH “debit” may elect not to report the retroactive lump-sums and their contributions, and employers who pay PERS remittance by ACH “credit” may elect not to report or elect to delay reporting or elect to report now and withhold payment on the retroactive lump-sum contributions. Will there be a penalty for non-payment or partial-payment of a PERS statement?
A2) No, the late or partial-payment penalty has already been waived until further notice. Employer Announcement #37, posted on the PERS Employer website, discusses PERS penalties and the remittance penalty waiver.
Q3) The lump-sum FAQ seems to imply two deadlines for reporting of retroactive lump-sums and their contributions, end of calendar year 2006 or the end of the 2006 annual reconciliation process. Which date is correct?
A3) The correct date is now the conclusion of the 2006 annuals process, likely to be on or about March 1, 2007.
Q4) Besides changes affecting LSPs related to HB2189, what about members now in the wrong plan because of how HB2189 slightly changed the definition of “break in service”? For example, how will PERS correct the subject salary change in LSPs if a member moves retroactively back into Tier One/Tier Two from OPSRP?
A4) PERS is reviewing the impact of this March 1, 2007 deadline for retroactive lump-sum reporting beyond the control of employers, such as plan changes and “break in service” issues which move members to a different program (Chapter 238 Tier One/Tier Two from or to Chapter 238A OPSRP). More information on this issue will be available in the near future.
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