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The California Public Employees’ Retirement System (CalPERS) has announced that it will not be invoicing public agency employers with agreements under Section 218 of the Social Security Act for certain fiscal year 2022-2023 maintenance fees. The CalPERS announcement may be viewed here. 

Section 218 Agreements are voluntary agreements between the federal Social Security Administration and state and local government employers that have chosen to provide Social Security Benefits to their employees. CalPERS is the State Social Security Administrator (SSSA) for California. In that role, CalPERS performs certain Social Security administrative functions even with respect to public agency employers that do not contract with CalPERS for retirement benefits, including processing Section 218 Agreement modifications, providing education to employers about Social Security and Medicare coverage, and collecting and reporting employer and coverage information.

CalPERS’s role as SSSA is not a core function of CalPERS and is separate from its more widely known pension and retirement services provided to state and local contracting public agencies and CalPERS members. CalPERS is prohibited from using funds collected through its pension operations to funds its operations as SSSA. Prior to 2019, CalPERS funded its SSSA administrative operations through interest collected on certain Social Security tax withholdings. However, that source of funding has been eliminated. As a result, since 2019, CalPERS has been charging administrative fees to fund the SSSA program directly to public agency employers with Section 218 Agreements. The fees consist of both a $650 fee to establish a new or amend an existing Section 218 Agreement, and a separate annual maintenance fee charged on a sliding scale based on number of employers, ranging from $200 to $2,500.

Because CalPERS has collected fees during previous years which exceed its targeted amount to fund anticipated SSSA expenditures for the next fiscal year, CalPERS will not be invoicing covered employers for the annual maintenance fee for the 2022-2023 fiscal year. The $650 flat fee will remain unchanged.

You may visit the CalPERS website for more detailed summaries of the Section 218 Agreement program, related fees, and CalPERS’s role as SSSA.