This information about the Hall case came out this afternoon
IMPORTANT HALL LAWSUIT NOTICE
PSPRS was informed last week that the Hall
lawsuit impacting Tier 1 EORP members has finally come to a conclusion.
As such, prejudgment interest was awarded at 4.25% up through June 28,
2017. Those interest amounts have been calculated and updated to the Employer and Local Board
portals today. As a reminder, the prejudgment interest amounts will
be included in the credit amounts available for employer use. These individual amounts will be available in the Members Only portal within the coming days.
The
post-judgment interest rate has been determined to be 5.25% where each
employer will need to calculate those individual amounts. As a reminder,
the post-judgment interest amounts will not be included in the credits
available to employers.
To calculate the post-judgment interest, you may use the following formula:
Post-judgment
Interest Amount = Total of Contributions and Pre-judgment Interest x
.0525 x Number of Days Between June 29 and Payout /365
This
should be calculated on an individual basis for each of your members.
Also, this formula assumes you will pay out the contributions and the
interest on the same day. If you are planning to pay them out separately,
then apply the same formula to the separate amounts (the only difference
will be the entry for the “number of days between June 29 and payout.")
Now that the Hall case is officially over, the courts have begun to address the Parker
case for PSPRS members. While the remedies will be similar as to the
statutory reference for the amount of interest, the actual rate applied
to pre-judgment interest could be different. Therefore, we appreciate
your patience as this case is adjudicated to completion.
Before I comment further, I need to see an actual pre-judgment interest calculation as I do not know how they will apply this rate to the excess contributions. 4.25% seems low to me, and it appears that they used the
prime rate in effect at the time SB 1609 was implemented in 2011 (3.25%) and added 1%. The current prime rate is 4.25%. I checked my own PSPRS account and found no pre-judgment interest total displayed, but PSPRS is updating its member portal and does not appear to be posting any new information there. The new member portal is supposed to go live on July 21, 2017, but it has already missed a previous deadline. While I suspect that PSPRS members are being cheated, I need to see more information first.
4.25% is too low, especially for what PSPRS made on our money.
ReplyDeleteBetter than 0%.
ReplyDeleteBetter than .01% the banks would have given if in a saving account. The extra money they make will help fund the system for the future.
ReplyDeleteOr fund the 6 figure salaries plus large bonuses for PSPRS.
DeleteGive them your money then. And turn your check over to them as well!
DeleteWhy isn't the state held accountable? The fact is the legislature was found to be in violation of the law?
ReplyDeleteIt was prime plus 1 wheb the case was originally decided a couple years ago that is why it is 4.25. Psprs members will be getting 5.25 bc prime currently is 4.25.
ReplyDeleteBut they made the extra money from OUR money! UNCONSTITUTIONALLY. I cant believe there is still sympathy for PSPRS or the Cities who didn't contribute properly during the prosperous years (Phoenix). Members should get every penny of interest made by PSPRS and the Cities should be paying 10 percent post-judgment especially the ones who always drag their feet (Phoenix)
ReplyDeleteI am not sure why this urban legend persists that employers did not contribute their fair share to the pension. Tier 1 and 2 employees pay a fixed rate, but employers have a variable rate. For a few years in late 90's and maybe even the early 2000's, the annual required contribution (ARC) for employers dropped below the 7.65% paid by employees because the pension was over 100% funded. That was the law, and employers paid the ARC that PSPRS said they owed. They did not shortchange PSPRS or deliberately underpay; they paid what they were required by law to pay and have continued to do so as the ARC's have increased over the past 15 years. Employers have more than made up for any small savings made years ago with the exorbitant ARC’s they are paying now. Employers have been victims of the collusion between the state legislature, who have nothing to lose from tampering with PSPRS, and state union leaders, who have everything to gain by enhancing benefits. The employers have to pay for the benefits but had no say in the legislation, as PSPRS is under control of the state. Making employers out to be the bad guys is not only dishonest but not helpful in solving PSPRS' problems.
DeleteOK, good point then on that part of the reply. Guess it would have been to much to ask for "employers" to save a little money and put it in a rainy day find when times are good and the system is well over 100 percent funded. But, like most they spend taxpayer money like drunken sailors.
DeleteYou are correct. I perhaps let the employers, cities in particular, off too easy. They have done more than their fair share to contribute to this problem. Allowing sick leave sellback to count as pensionable income for years when it was illegal is just one example. Nevermind all the other things they spend on that fall outside of their core services. Thanks.
Delete100 percent on point. So why doesn't the state have to foot the bill? Or at least make some sort of contribution to the law they broke? Thanks
ReplyDeleteI think this is what the states would call an unfunded mandate--something they readily complain about when the federal government imposes them on the states. I don't think the state has any obligation to pay anything, just as the federal government pays nothing to states for federal laws that force costs onto states, despite the fact that they have created the mess for local employers through their unholy alliance with the state-level public safety unions. I wish this wasn't the case. If states had some more skin in the game they would be less cavalier with other people’s money.
DeleteThanks
ReplyDeletei don't understand the June29th and payout 365 what does that mean?
ReplyDeleteThat is the amount of time between when the pre-judgment interest period ended and when you are actually returned your excess contributions. That period is covered by post-judgment interest of 5.25%. Each day after June 29th earns 1/365 of .0525, which for $12,000 of excess contributions is about $1.44 per day of post-judgment interest. For comparison, pre-judgment interest would be about $1.40 per day.
DeleteSo what would be the projected overall interest to be paid in the scenario you provided if it were to pay by July 31st?
DeleteIs the pre judgement interest being paid by the employer or by psprs/eorp?
ReplyDeleteIf you are referring to who actually delivers the funds, my understanding is that it will come through your employer. As to who actually pays the interest, I would assume that it is deducted from the employer's accrued assets being held by PSPRS.
DeleteHas there been any changes as of today (07/29/17) on the Parker interest? I got a message from my (former) employer that they are getting ready to issue the refund checks, and they state verbatim:
ReplyDelete"XXXXXXXXXX XXXXXXX is preparing to disperse the PSPRS refund owed to you as determined by the Court. The refund will include the total amount of your excess contributions plus all applicable pre and post judgement interest."
Has there been some sort of agreement reached?
And, according to the last PSPRS Local Board meeting I went to, pre-judgement interest will be paid by the employer, subject to crediting to their PSPRS account, just as the over payment itself is. However, post-judgement interest will NOT be credited and is the total responsibility of the employer.
I don't see how forcing the post-judgement interest on the employer is proper in any way. I wonder if/when the agencies themselves are going to file suit, or appeal THAT decision.
How are they going to pay the interest when the rate has not been finalized and entered in the Parker case?
DeleteSo how is the pre-judgement interest going to work? Will it be a flat 4.25 % for example 10,000 check, a check for $425? Or will it be calculated properly, the first year gets 4.25% interest for 6 total years from 2011, the 2nd year 4.25% interest for 5 total years from 2011 etc?
ReplyDeleteBased on PSPRS' formula for post-judgment interest, it would use the pre-judgment rate going all the way back to July 2011. That rate/365 days will be what you earn every day on your accumulated excess contributions. This means your daily rate of interest would increase every two weeks up until you were paid your refund. Using your $10,000 figure, someone should be earning $1.16 per day on that amount from the time your employer stopped taking the extra 4% from your check until your refund was paid to you. Obviously, the calculation of interest for the entire 5-6 year period would be much more complicated because the accumulated excess increased every two weeks.
DeleteFor those of us who retired prior to the Hall & Parker cases; from what I understand, we are supposed to finally see a COLA increase in July 2018. Does anyone know the percentage of that increase? The Hall and Parker cases are monopolizing all of the information about our retirement system, but it doesn't affect us who have already retired.
ReplyDeleteThat will be determined by the regional consumer price index (CPI) rate at the end of fiscal year 2018, which ends June 30, 2018. You will get either that regional CPI or 2%, whichever is lower. Just as example, the national CPI at the end of June 2017 was 1.6%, so if the COLA was in place now, your individual monthly benefit would increase by that amount.
Delete