Office of Retirement Services ~ Frequently Asked Questions

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1 Office of Retirement Services ~ Frequently Asked Questions FAQs Retirement 1. How old must I be to retire? Pension Plan Retirement and DROP Retirement If you enrolled in FRS before July 2011, normal full retirement age is 62 with at least 6 years of creditable service or 30 years of creditable service, regardless of age. If you enrolled in FRS July 2011 or after, normal full retirement age is 65 with at least 8 years of creditable service or 33 years of creditable service, regardless of age. If a member retires early, he or she will receive a 5% reduction for every year under their full retirement age. This penalty is permanent. Investment Plan Retirement If you initially enrolled in FRS before July 2011, OCPS will allow you to retire in the Investment Plan at 59 1/2 with at least 6 years of creditable service or 30 years regardless of age. If you initially enrolled in FRS July 2011 or after, OCPS will allow you to retire in the Investment Plan at 59 1/2 with at least 8 years of creditable service or 33 years regardless of age. Once you take a distribution (cash or a rollover) you are then considered a retiree with FRS regardless of your age. 2. What is the difference between the FRS Pension Plan and the FRS Investment Plan? The FRS Pension Plan is a defined benefit plan which provides a guaranteed monthly pension check based on the option selected. The FRS Investment Plan, also known as the lump sum, is a defined contribution plan. You manage the investment of your retirement account. You assume the risk of loss and also the potential for gain on the money in your retirement account, based on your investment choices. 3. How soon before my anticipated retirement should I contact the Office of Retirement Service to schedule an appointment? One to three months prior to your anticipated retirement/ DROP begin date.

2 4. What should I bring with me to my retirement appointment? Your OCPS badge, your driver s license, a copy of your birth certificate / naturalization certificate and if married, a copy of your spouse s birth certificate / naturalization certificate. Beneficiary information (name, date of birth and social security number.) 5. How is my Retirement check calculated? The monthly benefit is based on years of creditable service, average final compensation and age at retirement. 6. What happens to my sick leave and vacation leave when I retire? Sick leave is paid out based on number of hours X hourly rate of pay X percentage based on years with OCPS to 3 years 35% to 6 years 40% to 9 years 45% to 12 years 50% and over 100% When you retire, accumulated sick leave is paid out through a special pay plan so that Payroll taxes (Fica & Medicare) are eliminated for you and the district. Sick Leave and DROP/ILR Participation: A percentage of sick leave balance is sent to Bencor in a tax deferred manner each anniversary of your participation in DROP. The percentage of hours paid each year is as follows: 1. Year 1 20% of balance of hours 2. Year 2 25% of balance of hours 3. Year 3 33% of balance of hours 4. Year 4 50% of balance of hours 5. Year 5 100% of remaining balance of hours If you leave DROP/IL early, then we calculate a Year 5 sick leave deposit at the time of your departure from OCPS. Administrative Sick Leave balances are paid out based upon the hourly rate at which the hours were earned. The frozen administrative balance is paid out at the hourly rate of pay at retirement. Annual Leave/Vacation Pay (12 month employees only) Annual leave is paid out as follows:

3 Classified: Guidance: Administrators: 240 hours max (30 days x 8 hours per day) 225 hours max (30 days x 7.5 hours) 480 hours max (60 days x 8 hours) If annual leave was paid out prior to DROP entry, those hours would decrease the maximum hours to be paid at DROP exit. 7. When will I receive my first retirement check? You will receive your first retirement check from FRS four to six weeks from your effective retirement date. Your retirement is always effective the first of the month following your separation from OCPS. 8. What is the Health Insurance Subsidy (H.I.S.) and how much will I receive? The FRS gives each retiree $5.00 for every year of creditable service at retirement with a maximum of $ Investment Plan retiree s must be the definition of normal retirement by FRS and take a distribution in order to eligible for the subsidy It does not have to be OCPS insurance to qualify. Some examples of insurance is medical, dental or vision. Proof of insurance at retirement is required. 9. What is the Irrevocable Letter of Retirement (ILR)? This is an OCPS Special Pay Plan in which an employee can begin participation upon obtaining normal retirement. Plan participation cannot exceed a maximum of 60 months. A percentage of the employee s unused sick leave is paid out at the end of each anniversary year they are in the ILR Plan. Participation in the IRL Plan is voluntary and does not guarantee employment for 5 years. The employee continues to earn service and salary credit with FRS while participating in the ILR. 10. Who must pay the 3% retirement contribution? Regular Class - Paying the 3% Contribution to FRS HA-Regular Class Pension Plan PA-Regular Class Investment Plan HM-Senior Management Pension Plan PM-Senior Management Investment Plan HI-Dist. Elected Official Pension Plan PI-Dist. Elected Official Investment Plan Renewed Membership Plan-Working on a 2 nd retirement - Paying 3% Contribution to FRS RA-Renewed Membership Pension Plan QA-Renewed Membership Investment Plan RM-Renewed Membership Pension Plan Senior Management QM-Renewed Membership Investment Plan Senior Management

4 DROP- Not Paying 3% Contribution to FRS DP-DROP participant Retiree initially employed on or after July 1, 2010, not working on another retirement-(no 3%) UA-Regular Class UM-Senior Management UI-District Elected Official 11. How do I get information about the FRS Pension Plan? Attend one of the Retirement Seminars offered by the Office of Retirement Services Phone Retirement Services at or Retirement.Services@OCPS.net Contact the FRS at Monday Friday 8am 5pm Visit the FRS website at How do I get information about the FRS Investment Plan? Information is available by attending an FRS Retirement Plan Choice Workshop, Calling the MY FRS Financial Guidance line at Monday Friday 9am 8pm (except holidays) to speak to an unbiased financial planner regarding the two plans Go to the website. Each employee has a one - time 2 nd election to switch plans. You must be actively employed and earning service credit at the time of the plan change. FAQs DROP Retirement 1. What is Deferred Retirement Option Plan (DROP)? DROP is a Deferred Retirement Option Program which is offered to employees who have reached normal retirement requirements. This program allows employees to continue working up to 5 years (60 months) while the monthly retirement benefit accumulates in an interest bearing account at FRS. You are enrolled in DROP for the maximum participation but you can leave any time prior to your 5 year end date. Once you enter DROP, no additional years of service or salary increases will be used in the calculation of your benefit. Additionally, the 3% retirement contribution is no longer required. 2. When am I eligible for DROP Participation? Normal retirement eligibility must be met in order to enroll in DROP. If an employee was enrolled in the FRS prior to July 2011, normal retirement eligibility is 30 years of

5 creditable service regardless of age or age 62 with at least 6 years of creditable service, whichever comes first. If enrolled in the FRS July 2011 or after, the eligibility is 33 years of creditable service or age 65 with at least 8 years of creditable service. K-12 Classroom Teachers or K-12 Paraprofessionals, School Psychologist, and Social Workers can go into DROP when they reach eligibility, or delay entry as long as they choose, and stay the full 5 years (60 months). Employees in all other job titles must enter DROP when they are first eligible in order to participate the full 5 years. Exceptions: An employee having reached 30 years of FRS creditable service can defer DROP enrollment until they reach age 57 if enrolled in FRS prior to July If enrolled in FRS July 2011 or after, the employee can defer DROP enrollment until age 60. Please call our office or us at retirement.services@ocps.net if you are not certain of your eligibility. 3. I m exiting DROP, what do I need to do? FRS will mail DROP exit paperwork approximately 3 months prior to your normal DROP exit date. You will be contacted by the Retirement Services office to schedule a DROP exit meeting. These meetings are held in a group setting at the RBELC. If you decide to exit DROP early, you should notify The Office of Retirement Services office 1-3 months prior to your DROP exit date. Retirement Services will notify FRS and schedule your group DROP Exit meeting.