BASIC (12-03)

After the referendum, the retirement system composed of those members who chose coverage may be included under the agreement as a retirement system coverage group. Because the retirement system consists only of those members who chose coverage, it includes:

• all employees who voted for coverage and who are members (actual and after December 31, 1959, deemed members) on the date of execution of the modification or the date designated to control who will be covered retroactively, in accordance with section 218(e)(2) of the Act;

• all employees who become members of the retirement system in the future. This includes individuals who were ineligible to become members of the retirement system (see SL 30001.340) but who later acquire membership by a change in the qualifying factors and who have not already been covered for Social Security; and

• all members of the retirement system group who initially declined coverage, who subsequently join the covered group pursuant to the second chance procedure. See SL 30001.335.

In order to determine whether services are covered or can be covered, determine what constitutes the retirement system, whether the positions in question are under that system, and the status of the individuals in those positions.

A. INELIGIBLES

Ineligibles, other than ineligible police officers and firefighters, can be covered as part of, or as an addition to, the retirement system coverage group if the State takes appropriate action. See SL 30001.340 for discussion of ineligibles.

B. OPTIONALS

For purposes of coverage under the desire for coverage procedures, an optional is an individual who had an option to join the retirement system on August 1, 1956, or if later, the date he/she first occupied a position under the system. With respect to an interstate instrumentality, an optional is an individual who had an option to join the retirement system on August 30, 1957, or if later, the first day he/she occupied a position under the system.

• Optionals are by Federal law deemed to be members of the retirement system where coverage is extended after December 31, 1959. These individuals have the same status for coverage purposes as actual members, i.e., they get an individual choice for coverage in the referendum. New optionals are covered as new members. An optional who voted against coverage will not be automatically covered if he later becomes a member of the retirement system.

• Where the retirement system coverage group was covered under the agreement prior to January 1, 1960, and did not include the optionals, the State could have given them an opportunity for coverage under the transfer procedures prior to January 1, 1970. (For a short period prior to January 1, 1960, the State had a choice as to whether to treat the optionals as members when extending coverage.)

C. MEMBERS WHO ELECT COVERAGE

Members who elect coverage are part of the deemed retirement system composed of positions of members who voted “yes” for coverage. They remain covered as long as they continue to be members of the retirement system or as long as they continue to occupy any position which is part of the retirement system coverage group. They cannot elect individually to terminate their coverage. See SL 30001.380, Continuation of Coverage Rules.

Example: Employees occupying part-time positions were included as part of the retirement system coverage group. Later, legislation was enacted to remove these positions from the retirement system. In a divided retirement system the incumbents under the continuation of coverage policy would remain under Social Security but any new employees occupying part-time positions would not, since they could not be members of the retirement system.

D. MEMBERS WHO DO NOT ELECT COVERAGE

These individuals are members of a separate retirement system which is composed primarily of the positions of those members who did not elect coverage. They can be covered if they elect to transfer to the covered group or after a favorable majority referendum is held among the members of their retirement system.

E. MEMBERS DENIED A CHOICE

If at the time of the division of a retirement system, a member, through error on the part of the State or political subdivision, is denied or is not given the opportunity to vote, the State must give the employee an opportunity to vote.

In addition, if an employee can conclusively establish that his/her election was based on erroneous information furnished by the State, the employee may request that his/her election be rescinded.

F. NEW MEMBERS

Generally, an individual who becomes an employee and a member of the retirement system after coverage is extended to the retirement system coverage group is a "new" member. A member of the retirement system who leaves his/her employment before coverage is extended to the retirement system coverage group is a "new" member on his/her return to employment. The employee is then compulsorily covered as a part of the retirement system coverage group.

1. Break in Service of Member Who Did Not Elect Coverage

Whether a member who has a break in service after coverage was extended to the retirement system coverage group is considered a new member upon return to employment is a State matter. The State’s decision depends upon the provisions of the particular retirement system involved and on State law. If the State considers an individual to be a new member of the retirement system upon return to employment, the employee is compulsorily covered. If the State considers an individual to have retained membership in the retirement system during a break in service, the employee is not considered a new member upon return to employment and retains his/her "no" vote--provided the entire retirement system to which the employee belongs was covered as a single retirement system coverage group. If the retirement system was divided into deemed systems, an individual who returns to work for the same deemed system after a break in service retains his/her "no" vote if the employee is not considered a new member of the deemed system under State law. This is a change of position effective July 15, 1976. However, an individual who returns to work for a different deemed system is compulsorily covered as a new member even though the employee previously voted against coverage.

The State's decision on whether an individual is considered a new member under State law must be applied consistently to all individuals similarly situated.

Example 1: A referendum was held among all the eligible members of the Municipal Employees Retirement System (MERS), a statewide system covering all municipal employees. A was an employee of City X and voted against Social Security coverage. After the coverage was extended to the retirement system coverage group, A terminated his employment with City X and entered private employment. Under the rules of MERS, A retained his membership in MERS. Two years later he was reemployed by City X. The State holds that he is not a new member of MERS. A is not a new member for purposes of coverage. He retains his initial choice of "No" coverage.

Example 2: A referendum was held among all the eligible members of MERS, a statewide system covering all municipal employees. A was an employee of City X and voted against coverage. After coverage was extended to the retirement system coverage group, A terminated his employment with City X and entered private employment. A withdrew his contributions from the retirement system. Two years later he is reemployed by City X. The State holds that he is a new member of MERS. A is a new member for purposes of coverage and is mandatorily covered.

Example 3: MERS is a statewide system that covers all municipal employees. For coverage purposes, the State deemed a separate retirement system to exist with respect to each political subdivision participating in the retirement system. Cities X, Y, and Z held referenda and coverage was provided for the retirement system coverage groups. A was an employee of City X and voted against coverage. After coverage was extended he left the employ of the City for private employment. He retained his membership in MERS. Two years later he returned to employment with City X. The State holds that he is not a new member of the deemed retirement system. A is not a new member for purposes of coverage and retains his "no" vote. If, however, he was a new member of the deemed system, he would have been covered compulsorily even though he had previously voted against coverage.

Example 4: MERS is a statewide system that covers all municipal employees. For coverage purposes, the State deemed a separate retirement system to exist with respect to each political subdivision participating in the retirement system. Cities X, Y, and Z held referenda and coverage was provided for the retirement system coverage groups. A was an employee of City X and voted against coverage. After coverage was extended he left the employ of the city for private employment. He retained his membership in MERS. Two years later he returned to employment with City Y. He is mandatorily covered as a new member, since he did not return to work as a member of the same deemed retirement system in which he had voted against coverage.

2. Change in Employment

If the retirement system which was divided was not the entire system, a member of a deemed retirement system who transfers to another deemed system is a "new" member and is compulsorily covered. However, if the transfer resulted from action taken by the political subdivision on or after September 13, 1960, and the two deemed systems are part of the same basic system, the member is not considered a new member and may carry his "no" vote with him. (This provision applies also in California to transfers prior to September 13, 1960.) If the transfer was to a newly created political subdivision (e.g., two school districts consolidated to form a new district) which is not automatically covered as part of a deemed retirement system, a referendum must be held to obtain coverage.

If a member of a deemed retirement system transfers to a position under a retirement system which has not been covered, a referendum must be held before he/she can be covered.

G. EMPLOYEES HIRED AFTER RETIREMENT SYSTEM DIVIDED BUT BEFORE EXECUTION OF MODIFICATION

Employees who become members of the retirement system after the division date and before the execution of the modification which extends coverage to the deemed retirement system coverage group may be given a coverage choice at the discretion of the State. These persons are not mandatorily covered under Federal law, nor is it contrary to Federal law to allow these members a choice up to the date of execution of the modification, provided all employees similarly situated are given the same opportunity.