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RETIREMENT CONTRIBUTIONS
Employee Contributions.
(Applies to Deputy Sheriff I and above)
Each member contributes a percentage of the gross salary based on the nearest age at the date of employment. General members meeting the two requirements of having been a member on March 7, 1973 and having thirty continuous years of service aren't required to make contributions (GC 31625.2)
If an employee receives a paycheck, which is similar than customary due to an absence without pay or a mandated furlough, a full retirement contribution will nevertheless be taken in order for the member to receive fourteen days of retirement service credit. However, in cases where the paycheck is too small to deduct a full retirement contribution, no funds will be taken and the individual will receive no service credit for that pay period (By-Laws VII). Such a situation may occur for an unpaid sick or unpaid vacation leave. The time lost in the retirement due to unpaid sick leave may be purchased if the absence is less than 12 consecutive months (GC 31646), but not unpaid vacation time.
Refundable/Nonrefundable
There are three types of money being paid into the pension fund: employer's contributions, the 7 percent given by the County on the employees' behalf, and the employees' contributions. The employee/member can select a refundable or nonrefundable option for their contribution. The difference is reflected when the employee terminates prior to normal retirement. The value of the refundable option is that the individual will have all employee contributions plus the employer's 7 percent returned if employment ceases before 5 years. The nonrefundable option allows for a lower biweekly contribution; however, none of the contributions would be refundable if employment ceases before 5 years. This option may be changed annually at open enrollment.
Employee Refunds
Those members, who are in the refundable plan, may withdraw their contributions if employment is terminated. Forms to accomplish this purpose are available from any department payroll check. There is a withdrawal charge of one-half the interest credited to the account, not to exceed $40.00. The process can take from 60 to 90 days for a refund to be received. According to GC 31628 the process is not to exceed 6 months from the date of separation. If all departmental data is submitted on a timely basis, the refund should be processed in approximately 60 days. Members may not borrow or withdraw contributions without terminating employment. Receipt of a refund will negate any future pension benefit.
If a disability retirement is being considered, the member should not apply for a refund of contributions. The SBCERA office should be contacted for further data.
Rollover of Refund to Avoid 20 Percent Withholding.
The individual leaving employment and desiring a one-time lump sum return of all SBCERA contributions will have 20 percent of the amount immediately withheld by the federal government unless the sum is rolled over into an IRA or another employer's defined benefit or contribution plan. The withheld amount will be applied towards federal income taxes. In addition, a 10 percent federal excise tax and a 2.5 percent state tax will be assessed on the individual, who does not roll over the funds and is younger than 59.5 years old.
Employer Contributions
The employer's contribution is generally a little bit more than the average of members' contribution, but this money is not received by the employee upon cessation of service. An individual would only receive this sum through a monthly retirement warrant. The employer may elect to pay for all or a portion of the member's contribution. When this occurs, these contributions are not refundable upon termination, but are only received by the individual in a service or disability retirement.
Investments and Interest
Currently the Board employs several money managers for domestic stock and international stock as well as domestic and international bonds and real estate. The earnings from the investments are reinvested and are used to pay for some retirement and disability benefits as well as all administrative costs. A part of the earnings is also distributed as interest to the nine benefit reserve accounts (in order to pay for items, such as all future death benefits, COLAs, survivor benefits, and burial allowances). In addition to the nine benefit reserve accounts, each member's account is also credited with approximately 6.25 percent annualized interest every June and December. The rate of interest by calculated by the actuary and adopted by the Board of Retirement (GC 31591).