PERF Employer Handbook: Admission to the Fund
A political subdivision may become a participant in the Fund after approval by its governing body. The governing body of a political subdivision determines the employee positions that will be covered under its PERF resolution.
When a political subdivision joins PERF, the governing body must agree to comply with the laws and regulations pertaining to the Fund. These include:
- Indiana Codes 5-10.2 and 5-10.3
- Title 35 of the Indiana Administrative Code
Eligibility for Participation
If a participating political subdivision plans to enroll a position in PERF, that position must be classified as full-time by the governing body, and the position must be one normally requiring performance of service of more than 1,000 hours per year. A school corporation position must be one normally requiring performance of more than 600 hours per year. Any position not meeting these requirements does not qualify for membership in the PERF program.
Covering Additional Positions
If you want to cover additional positions under the plan (also called an enlargement), you must contact PERF. Employers may enlarge their PERF coverage on January 1 or July 1 of any given year. No retirement benefit may be paid until six months after the effective date of participation. If you elect to cover an additional position, all full-time employees working in that position must be covered.
The process for adding positions to PERF coverage:
- Employer completes an Actuarial Survey form provided by PERF. (A fee may be associated with this form. Contact PERF for more information.)
- PERF’s actuary determines the employer rate. PERF will notify you of the amount.
- Employer’s governing body approves and signs resolution to participate in PERF.
- PERF’s Board of Trustees approves both new and enlargement resolutions.
Employers who have elected to cover all full-time positions must periodically provide PERF notice of position title changes and updates.
Withdrawal from the Fund
Indiana Code 5-10.3-6-8 permits an employer to withdraw from the Fund. This section covers complete withdrawals as well as withdrawal of a departmental, occupational or other definable classification of employee. This includes the privatization of government functions.
Except in cases where the employer ceases to exist as a political entity, there is a two-year waiting period following notice to the PERF board of intent to withdraw, in addition to other requirements set forth by statute. All present and future pension obligations must be fully funded at the time of withdrawal. In addition, the proposed withdrawal must not affect the Fund’s compliance with Section 401(a)(4) of the Internal Revenue Code. This is the section of the Internal Revenue Code that prevents current taxation of members for money set aside on their behalf. Any employer considering a full or partial withdrawal should contact PERF as early as possible for guidance.
Authorized Agent for Signing Forms
The governing body of the employer must use an Authorized Agent Designated To Perform Necessary Duties form (on employer forms Web page) to designate an Authorized Agent to accept pension liability on behalf of that governing body. This Agent must sign PERF forms and will be the security administrator for ERM. For initial ERM setup, the Authorized Agent can assign this role to a designee using the ERM Data Setup Form.
Submitting Membership Records and Payroll-Based Reports to PERF
Indiana Code 5-10.3-7-10 requires all new membership records be submitted via ERM prior to the first wage and contribution submission for the member. If this membership record is not received prior to the first submission, the transaction will error out and will not be able to be processed until the membership record is received. Indiana Code 5-10.3-7-12.5 gives the PERF board the authority to levy fines of $100 for each day the records or reports are late. ERM functionality requires employers to submit membership records online.
A report and payment of employee contributions and employer contributions shall be submitted on a payroll basis. Reports and payments should be submitted the date the employer pays its employees. There will be a seven calendar-day grace period from the payroll date before interest begins to accrue on both the member’s and employer’s contributions for late payments. If payment has not been received by 30 calendar days after the due date, penalties of $100/day may begin to accrue.
Contribution Rate
Each employer contributes at an actuarially determined rate. This rate is re-evaluated annually and usually is given to employers by December 31 of the fiscal year two years prior to the fiscal year to which it applies. The contributions are made to fund the employer’s pension obligations; these contributions do not fund individual employee accounts. The amount is expressed as a percentage of gross payroll. This employer contribution rate is in addition to the three percent mandatory member contributions.
Changes in Employer Contribution Rate
The employer’s rate may change from year to year depending upon the particular employer’s current pension obligations. Factors that may cause a change in rates are investment returns, turnover, mortality experience, an increase in membership or wages, recent retirements, members reaching vesting status, and certification of prior creditable service for current or former employees.
