DA Memo - May 11, 2004

1. Employer contribution rates
2. Web-based contribution annual reporting
3. Working after retirement
4. When employees are called to active military service
5. Employer survey

1. Employer Contribution Rates

Death and Disability Contributions (includes all KPERS, does not include KP&F)
Several quarters of moratorium, enacted by the Kansas Legislature, are ending, and employers will resume making death and disability contributions July 1, 2004.
· July 1, 2004, through June 30, 2005, contribution rate = 0.6 percent
· July 1, 2005, through June 30, 2006, contribution rate = 1 percent (anticipated, not yet official)

Retirement Contributions (KPERS - Local)
January 1, 2005, all contribution rates will increase by 0.19 percent. The Retirement System will send all local governments an individualized rate letter by the end of May that will explain your contribution rates.

Retirement Contributions (KPERS - State and School)
July 1, 2004, all contribution rates will increase by 0.29 percent. State agencies receive their rate notification from the Division of Accounts and Reports. The 2004 Kansas Legislature passed legislation altering the method by which employer contributions from school districts are remitted to KPERS. KPERS staff will be working with the Department of Education and the State Treasurer's office to develop procedures. We will provide more information as soon as it is available.

Retirement Contributions (KP&F)
The Retirement System will send all KP&F employers an individualized rate letter by the end of May that will explain your upcoming contribution rates.

2. Web-Based Annual Contribution Reporting

In the last year, KPERS developed a web-based program for annual contribution reporting. About 100 employers participated in a pilot program with great success. Pilot employers completed a satisfaction survey after reporting via the Internet, and we are currently implementing suggestions and changes to make the program better. You'll learn more about web-based reporting opportunities at designated agent workshops this fall. We look forward to expanding the program in an effort to make the annual reporting process easier for all employers.

3. Working After Retirement

If members go to work for a "non-Retirement System" employer, there are no restrictions on when they can begin work or on how much they can earn. Also, there is no earnings limitation for certain substitute teachers in K-12 education or certain legislative employees.

30-day Waiting Period After Retirement
All members must wait 30 days after retiring before going back to work for any Retirement System employer. To calculate the 30-day waiting period, count the day after the retirement date as day one.

Example: If a member's retirement date is July 1, July 2 is day one and a member cannot begin employment with any affiliated employer under any system until August 1.

$15,000 Earnings Limit
According to Kansas law, if a member returns to work, he or she has an earnings limitation if:
· The member retired on or after July 1, 1988, and
· The member goes to work for an employer he or she worked for during the last two years of his or her Retirement System participation.

Example: If a member retires August 1, he or she can earn $15,000 from September 1 through December 31. He or she will then start the new year with a $15,000 limit for the period of January 1 through December 31 of the following year. The $15,000 limit will continue each year as long as the retired member is working for the same employer.

When reaching the $15,000 limit before the end of the year, members have two choices:

The State of Kansas is one employer. Members employed by state agencies, boards, commissions, and institutions under the Board of Regents, are all considered employed by the State of Kansas. Going from one to another of these employers is not a change of employers under this law.

Exceptions: Substitute teachers or administrators who are on daily call or temporary status do not have the $15,000 earnings limit. Certain legislative employees and judges have special guidelines regarding the earnings limit.

KP&F Tier II members on disability are not retired and the $15,000 retiree earnings limit does not apply to them. Tier II disability recipients have their own earnings limitation. Every calendar year, their disability benefits will be reduced $1 for every $2 of earned income over $10,000 that is subject to Social Security.

What you need to do: Educate members about the waiting period and earnings limitation. It is also your responsibility as a designated agent to notify the Retirement System when a retiree working at your employer reaches the $15,000 earnings limitation, regardless of whether he or she decides to continue working. Complete an Earnings Limitation form (KPERS-15S) and return it to the Retirement System.

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4. When Employees Are Called to Active Military Service

When members are called to active military service, they need to contact you to arrange a military leave of absence. KPERS needs to know if a member is off the payroll.

1. Enter "Code 2" for the employee on your Employer Annual Report for the time he or she is on military leave and off your payroll.
2. Submit a Report of Member Status form (KPERS-1) when the employee returns to the payroll.

By law, employers are required to give employees on military leave the same rights and benefits that they would give to an employee on a "non-military" leave of absence. Active military personnel also have a few additional KPERS benefits.

Basic Group Life Insurance

• Applies to KPERS, Judges, Board of Regents, State employees in their year of service, and local employees whose employer has first-day coverage for death and disability.
• Basic group life insurance continues while an employee is on active military duty, at no cost to the employee.
• Once the employee returns from active military duty, basic life insurance coverage stops if the employee does not immediately return to covered employment.

Optional Group Life Insurance

• Applies to all employers who are affiliated for optional insurance, including KP&F.
• Optional life insurance continues for the first 12 months an employee is on active duty. Employees pay the premiums directly to Minnesota Life Insurance. Each employee must complete an Optional Group Life Insurance Continuation form (KPERS-79C). Designated agents then need to complete the employer section and send the form to the Retirement System within 30 days of the last day the employee is on the payroll.
• After 12 months, employees have the option to convert to an individual policy. They can do this by completing a Minnesota Life Insurance Conversion form and sending it to Minnesota Life. Forms are available at www.kpers.org/forms or by calling toll-free (877) 215-1476.
• Optional insurance coverage is reinstated if an employee returns to work in a covered position within five years, even if he or she did not choose to convert to an individual policy. Premiums will be based on his or her age when returning to work.

Service Credit

• If employees are in their "year of service" when called to active duty, their time in active military duty is counted toward completion of their "year of service" if they return to the same employer.
• If employees are in the middle of a service purchase when called to active military duty, their purchase resumes when they get back and nothing changes.
• When employees return from active duty, the Retirement System might be able to grant them service credit for their time away at no cost to them. (See "Receiving Granted Service" below.)

Disability Insurance
Employees are not covered by disability insurance while on active military duty.

When an Employee Returns From Active Military Duty

• When an employee returns to work after serving on active military duty, you need to notify the Retirement System by completing a Report of Member Status form (KPERS-1), giving the date the member returned to your payroll.

• Ask the employee if he or she wishes to reinstate his or her optional insurance. To notify KPERS that the employee wants to reinstate coverage, complete an Optional Group Life Insurance Return to Payroll form (KPERS-79R) and send it along with the KPERS-1 form. Minnesota Life will reinstate coverage at the previous coverage level with no waiting period or approval process.

• Ask the employee if he or she would like to apply for granted or purchased service credit for the time he or she was on active military duty. The maximum amount of credit allowed for military service is six years, whether purchased or granted. Employees cannot receive military service credit for service they are already getting credit for. For example, if an employee leaves in the middle of a quarter, he or she is already receiving participating service credit for that quarter and cannot apply for purchased or granted military service credit for that quarter.
  
  For KP&F, purchased military service does not count toward their eligibility to retire, but it does increase the dollar amount of their retirement benefit.

Receiving Granted Service Credit for Military Service
In certain circumstances, Kansas law allows the Retirement System to grant KPERS service credit for active military duty, at no cost to employees, if the military duty interrupts their public service. They must be employed immediately before and immediately after the active military duty. This type of service is limited to five years and they must apply for it. Have the employee send a copy of his or her DD-214 military discharge papers, showing the period of military duty along with a letter to the Retirement System requesting granted service credit.

Purchasing Service Credit for Military Service
Employees are eligible to purchase KPERS service credit for active military service. Such service will be converted to months and divided by three to determine the number of quarters that may be purchased. Any fractional number shall constitute a quarter that may be purchased. Reserve and National Guard service may be purchased at a rate of one quarter for each year of service in active or inactive reserves. Have the employee complete a Service Credit Purchase Application form (KPERS-67) and send it to the Retirement System.

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5. Employer Survey

The Retirement System conducted its first employer satisfaction survey in November and December 2003. We had a 55 percent response rate with 804 employers responding. Results showed that employers are generally satisfied with our services. The highest levels of dissatisfaction were for:

1. Training for routine transactions.
2. Instructions, forms and training for the contribution reporting process.

We will use these results to develop an understanding of what is important to you as employers and to improve the services we provide. We will also use these comprehensive results to provide a baseline for future surveys. We are currently creating a plan to follow up on suggestions made by respondents. Thank you to all designated agents who completed the survey.