Board to seek legal guidance after employee says they were not offered pension option at hire

Board staff reported that a current employee who started roughly four years ago was placed in the 401(a) plan at hire and was not offered the defined‑benefit pension during onboarding, a situation staff said likely arose amid constrained HR capacity during the pandemic.

"We do still have an employee that started 4 years ago that was not offered the opportunity to participate in the pension plan because we didn't have an HR team," staff liaison Monica Kinnerman said, explaining she could not find files showing the employee had been offered and declined pension enrollment. Monica said the employee remains interested in moving into the pension plan and staff will ask city attorneys to consult with Mission Square (the recordkeeper/administrator named in the packet) about transfer mechanics and precedent.

Board members asked whether the employee’s 401(a) dollars would transfer and about vesting. Monica said the employee is fully vested in the 401(a) after one year and that, if admitted into the pension plan, the employee would start pension service fresh and would need five years to be fully vested in the pension. Board members noted earlier-era practices that often defaulted new hires into the 401(a) for cost reasons and directed staff to research hires during 2020 and to raise the question with Mission Square and the city attorney.

Monica said distributions and plan operations going forward have been corrected in onboarding materials and orientations; she will return to the board with counsel's guidance and any recommended next steps.