OAR 459-009-0084: Employer Unfunded Actuarial Liability Lump-Sum Payments With an Actuarial Calculation

The words and phrases used in this rule have the same meaning given them in OAR 459-009-0086. (1) An actuarial calculation is required before an employer may make a UAL lump-sum payment if the employer: (a) Has a transition liability; (b) Intends to establish a new side account with a new employer contribution rate as of a date specified by the employer; (c) Has requested an actuarial calculation where a calculation is not otherwise required; or (d) Intends to make a UAL lump-sum payment as specified in OAR 459-009-0086(9). (2) At least 45 calendar days before the date the employer intends to make a UAL lump-sum payment with an actuarial calculation, the employer must notify PERS Actuarial Services in writing that it intends to make such a UAL lump-sum payment. The notification must specify: (a) The amount of the intended lump-sum payment; (b) Whether it is a lump-sum payment pursuant to OAR 459-009-0086(9), and if so: (i) The amortization period elected, and (ii) The year the employer rate offset is to begin; (c) At least one potential date for the payment; and (d) If the employer so elects, a specific effective date for the contribution rate change resulting from the UAL lump-sum payment, such date must be the first of any month following the employer’s intended payment date but may not be more than 12 months after the employer’s intended payment date, except for UAL lump-sum payments made pursuant to 459-009-0086(9). (3) PERS staff must notify the employer within five business days of receipt of a notification in section (2) of this rule if the notification is incomplete or the process cannot be completed by the earliest intended date of the UAL lump-sum payment. (4) The PERS consulting actuary must provide an invoice charging the employer for the cost of the UAL calculation requested by the employer. At least 30 calendar days before the date the employer intends to make a UAL lump-sum payment, the employer must remit payment for the cost of the UAL calculation directly to the PERS consulting actuary according to the instructions on the invoice. Failure to remit payment according to the terms of this section may result in the PERS consulting actuary not completing the employer’s UAL calculation by the proposed UAL lump-sum payment date. (5) Upon receipt of notification that an employer has made payment in full for the requested UAL calculation, PERS staff shall request that the PERS consulting actuary calculate: (a) For an employer participating in an employer actuarial pool, 100 percent of the employer’s share of the UAL for the employer actuarial pool. This calculation will be: (A) Based on the fair value UAL of the employer actuarial pool, from the most recent actuarial valuation; (B) Based on the employer’s covered salary, as a proportion of the pool, as reported in the most recent actuarial valuation; and (C) Adjusted to reflect the effect of time from the most recent actuarial valuation to the intended date(s) of payment, using generally recognized and accepted actuarial principles and practices. (b) For an employer not participating in an employer actuarial pool, 100 percent of the individual employer’s UAL. This calculation will be: (A) Based on the fair value UAL of the individual employer, from the most recent actuarial valuation; and (B) Adjusted to reflect the effect of time from the most recent actuarial valuation to the intended date(s) of payment, using generally recognized and accepted actuarial principles and practices. (c) For a UAL lump-sum payment to establish a new side account, the effect of the following UAL lump-sum payment amounts on the individual employer’s contribution rates using the information specified by the employer in its notification in section (2) of this rule: (A) 100 percent of the individual employer’s UAL calculated in subsection (5)(a) or (b) of this rule; (B) The UAL lump-sum payment amount(s) specified by the employer in its notification, if provided; and (C) The minimum amount of the UAL lump-sum payment, if any. (d) For a UAL lump-sum payment as specified in OAR 459-009-0086(9), the maximum lump-sum payment amount that will not result in a contribution rate of less than 0.00%, if the amount of the intended lump-sum payment specified by the employer in subsection (2)(a) of this rule would in effect result in a surplus lump-sum payment as defined under OAR 459-009-0090(1)(g). (e) For a UAL lump-sum payment into an existing side account, the estimated effect of the additional deposit on the individual employer’s contribution rates effective July 1 of the year following publication of the actuarial valuation for the year in which the additional deposit is made. (6) PERS staff must notify the employer in writing of the results of the individual employer’s calculation in section (5) of this rule otherwise designated by the employer under subsection (2)(c) of this rule. In addition, PERS must send the employer a notification describing risks and uncertainties associated with the calculation of the individual employer’s UAL if such notification has not already been provided. (7) The employer must notify PERS Actuarial Services in writing at least three business days before making a UAL lump-sum payment. This notification shall be in addition to the notification in section (2) of this rule and must specify: (a) The amount of the payment; (b) The date the employer intends to make the payment; (c) Whether the payment is to establish a new side account or to be deposited into an existing side account; and (d) If the payment is to be deposited into an existing side account and the employer has more than one side account, which side account is to receive the deposit. (8) For a UAL lump-sum payment to establish a new side account, PERS must receive the correct funds no later than five business days after the intended date of the UAL lump-sum payment specified by the employer in the notification described in section (7) of this rule in order to adjust the employer contribution rate to that reported by PERS in section (6) of this rule. (a) If the UAL lump-sum payment is received by PERS on or before the intended payment date specified in the notification described in section (7) of this rule or within the five business days following the intended payment date, the new employer contribution rate shall be effective for payrolls dated on or after: (A) The first of the month following receipt of the UAL lump-sum payment by PERS; or (B) The date specified by the employer in subsection (2)(c) of this rule, whichever is later. (b) If the UAL lump-sum payment is received by PERS more than five business days after the intended payment date, the employer’s contribution rate shall be adjusted based on the next actuarial valuation after the date of receipt of the UAL lump-sum payment and effective July 1 of the year following publication of that valuation. (c) If the UAL lump-sum payment received is other than any amount specified in the notification under section (7) of this rule, the employer’s contribution rate shall be adjusted to the rate the payment amount fully funds using the actuarial calculation in subsection (5)(c) of this rule. (d) If the UAL lump-sum payment received is less than the minimum amount described in OAR 459-009-0086, the payment will be returned to the employer and no adjustment will be made to the employer contribution rate. (9) When an employer makes a UAL lump-sum payment into an existing side account: (a) The final rate adjustment from the additional UAL lump-sum payment(s) will be calculated in the actuarial valuation for the year in which the payment is made, and will be effective on July 1 of the year following publication of that valuation. (b) The calculation in subsection (a) of this section will supersede any estimate provided in an actuarial calculation under subsection (5)(d) of this rule. (10) Nothing in this rule shall be construed to prevent the Board from: (a) Adjusting employer contribution rates based upon the date of receipt of funds or errors in the notification described in section (7) of this rule; or (b) Taking action pursuant to ORS 238.225.