EIC96-3 Volume 12 Issue 3
Golden Handshake Enhanced Benefit Program Billing Provisions
New Payment Alternative Offered
Administrative Directive 94-05 outlined the employer payment requirements for the Golden Handshake Enhanced Benefit program. Employers may choose from two plans for making payment for their participants, as stated in the directive:
- Full payment plan: A check for the full estimated payment must be sent to STRS with the Employer Certification of Eligibility, form MS 187, within 30 days after the effective retirement date.
- Deferred payment plan: Payment may be made in four equal annual installments after the retirement date… STRS will send billings annually from the effective date of retirement.
The Education Code requires an employer to remit the actuarial equivalent of the difference between the allowance the member receives after receipt of the service credit and the amount the member would have received without this service credit. To assist employers in determining the actuarial equivalent, STRS included within the Administrative Directive a present value table which is based on the payment being received by STRS within 30 days of the retirement of the member(s). This table includes the effect of 30 days of interest. As such, any remittance made beyond 30 days after the effective date must include additional interest.
Although STRS prefers to receive the Golden Handshake payment with the required Employer Certification of Eligibility form and related documents for the full payment option, we are aware that due to the longer window periods, it has become increasingly difficult for some employers who select the full payment plan to comply with the requirements of this method of payment.
For employers who are in this situation but do not wish to make a four-year deferred payment, STRS offers the following payment alternative:
Upon completing the Golden Handshake documents, the employer will submit the required forms including the Employer Certification of Eligibility to STRS identifying “Deferred Payment Plan”. When the employer completes the remaining documentation, it should be forwarded to STRS along with a request for a closure billing. STRS will immediately bill the employer for the present value and administrative costs associated with the Golden Handshake retirement(s), including interest for the period of the deferral.
Please be aware that using this payment alternative will result in a billing which will be higher than if the employer had remitted the present value cost with the required Golden Handshake documents within 30 days of the effective retirement date of the member(s). Please consider this when assessing the cost savings for participating in the Golden Handshake Enhanced Benefit Program.
If you have any questions regarding these payment options, please call STRS Accounting Control at (916) 229-3937.
Employer Information Circulars [EIC] are sent to school district and community college employers as informal guidance that provides immediate information on a single topic.
PO Box 15275
Sacramento, CA 95851