How To Get A Pension From The Ersri

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1 Employees Retirement System Of Rhode Island Handbook Membership & Retirement

2 Reduce Contact: Employees Retirement System of Rhode Island 40 Fountain Street Providence, Rhode Island Call Center: / Fax: Website: This booklet was prepared exclusively for use by members of the Employees Retirement System of Rhode Island (ERSRI). It is not intended as a substitute for the Rhode Island General Laws (R.I.G.L.) nor will its interpretation prevail should a conflict arise between the contents of this booklet and Chapters 16, 36 and 45 of the R.I.G.L. Rules governing retirement are subject to change periodically either by statute of the Rhode Island Legislature or by regulation of ERSRI. The information contained in this booklet is provided for Rhode Island state employees, Rhode Island public school teachers, state correctional officers, state registered nurses, and general municipal employees of participating Rhode Island units of the Municipal Employees Retirement System. Different retirement rules and requirements apply to disability applicants, police & fire members, and members of the General Assembly. Contact ERSRI call center for additional information if you are in one of these categories. Eighth Edition: September, 2010 State and Teache Correct Directions: ERSRI is located in downtown Providence, across from the Journal Bulletin. Take Exit 21 Downtown Providence off Route 95. Parking is available in nearby parking garages. Pension Ded

3 Table of Contents Members ERSRI Member Services Membership Information Contributions Service and Purchase of Service Credit Refund & Rollover Retirees Your Retirement Benefit Eligibility State and Teacher Eligibility State Correctional Officers Eligibility State Registered Nurses Eligibility Municipal Eligibility State and Teacher Cost-of-Living Adjustment (COLA) Correctional Officers & MHRH Nurses COLA Municipal COLA Retirement Options Reduced Benefit Eligibility Early Retirement Deferred Retirement Teachers Survivors Benefits Beneficiaries Benefits Applying for Retirement Pension Deductions and Retiree Health Benefits Post-Retirement Employment

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5 ERSRI Member Services 5 ERSRI Website Visit our retirement website today at and be sure to create an account and add your address to get retirement news. The ERSRI website can help you better understand the retirement process, view real time information regarding your retirement account including member account balance, create an estimate of benefits, retire online, print forms, view monthly pension payroll, read our ecompass Newsletters and ehandbooks, as well as contact us. ecompass Newsletters ERSRI is going green! Active and retired members of the retirement system will receive the ecompass Newsletters, a great way to get fast and convenient updates on retirement news. To add your address to our system, simply go to and create an account. Go to Change Web Profile tab and update or add your account. ehandbook Series Membership & Retirement Handbook Disability Handbook Police & Fire Handbook ehandbooks are available on our website Retirement Counseling Services ERSRI offers group counseling at our Providence office. A benefit estimate and retirement forms are given at the group session. Schedule your appointment three to six months before retirement by contacting our call center at Annual 1099-R At the end of each January, retired members of the retirement system will receive a 1099-R form. The form provides the details concerning the benefit distributions you received during the current tax year and should be used in filing your federal income tax return.

6 6 Membership Information What is the Employees Retirement System of Rhode Island? The Employees Retirement System of Rhode Island (ERSRI) is a contributory defined benefit retirement system governed by Chapters 16, 36 and 45 of the Rhode Island General Laws. The plan provides retirement, disability, and survivor benefits to state employees, public school teachers, and municipal employees who are employed by a participating municipality. Who governs the Employees Retirement System of Rhode Island? The Employees Retirement System of Rhode Island is governed by a retirement board. The Board, which meets the second Wednesday of each month, establishes rules and regulations for the agency. The Board also approves each application for disability benefits and hears appeals by members who have been aggrieved by an administrative decision of the executive director. Finally, the Board oversees the delivery of services and information to its membership of over 34,000 active members and close to 24,000 retirees. The retirement office staff is managed by an executive director who oversees a staff of 25 full-time employees. The Board is composed of fifteen members chosen in accordance with Chapter 36 of the Rhode Island General Laws and is chaired by the General Treasurer. Its membership includes: General Treasurer; the director of administration or designee; the budget officer or designee; 2 public member appointees of the Governor, subject to Senate approval; 2 public member appointees of the General Treasurer, subject to Senate approval; President of the League of Cities and Towns or designee; 2 active state employees or union representatives elected by active state membership; 2 active teacher or union representatives elected by active teacher membership; municipal member or union representative elected by active municipal membership; 2 retired members elected by the plan retirees; For those members elected by the membership or appointed by the Governor and General Treasurer, the term of office is four years.

7 Membership Eligibility 7 Who is eligible to become a member of the Employees Retirement System of Rhode Island? State Employees: Any person employed by the State of Rhode Island in a posted position of at least 20-hours-per-week and consistently works every week of the year at a minimum of 20-hours-per week is eligible for membership in the Employees Retirement System of Rhode Island. Your employment cannot be of a casual or seasonal nature and your business time must be devoted exclusively to the service of the state. Correctional Officers - members employed as assistant director (adult services), assistant deputy director, chief of inspection, and associate directors, correctional officer, chief of security, work rehabilitation program supervisor, supervisor of custodial records and reports, and classification counselor within the department of corrections as provided in R.I.G.L For information on retirement eligibility, please see page 24. Registered Nurses - members employed as registered nurses within the department of mental health, retardation, and hospitals as provided in R.I.G.L For information on retirement eligibility, please see page 26. Municipal Employees: Any person employed in a posted position of at least 20-hours-per-week and consistently works every week of the year at a minimum of 20-hours per week is eligible for membership in the Municipal Employees Retirement System. Your employment cannot be of a casual or seasonal nature and your business time must be devoted exclusively to the service of the participating municipality. City or town council members are eligible for membership as provided in R.I.G.L Public School Teachers: Public school teachers are eligible for membership in the Employees Retirement System provided they are: (1) certified by the Board of Regents; (2) engaged in teaching as a principal occupation; and (3) regularly employed on at least a half-time basis as a teacher in any city, town, regional school district or collaborative. The statutory definition of teacher, found in R.I.G.L , allows the following permissible titles: teacher, supervisor, principal, assistant principal, superintendent or assistant superintendent, director, assistant director, coordinator, consultant, dean, assistant educational administrator, nurse teacher, and attendance officer, or any person working within the educational system certified by the Board of Regents; or occupational or physical therapists licensed by the department of health and employed by a school committee. Other permissible titles are school business administrators and school psychologists. School business administrators are not required to hold a teaching certification. Am I required to become a member of the system? Yes. By law, membership in the Employees or Municipal Employees Retirement System is a condition of employment and is required of all employees who meet the Board s eligibility requirements.

8 Contributions 8 How much am I required to contribute? The amount that you contribute to the system is based upon a percentage of your total salary, excluding overtime. Type of Employee Teachers State Employees Police & Fire Members Municipal Employees Percentage 9.5% 8.75% 7.00%* 6.00%* * Those public employees whose municipalities have Cost of Living Adjustment (COLA) provisions, or police and fire members whose municipalities have accepted the 20-year plan, contribute an extra 1% into the retirement system for each additional benefit provision. What does the state or municipality contribute to the retirement system? Each year, the retirement system s actuary determines the amount of money necessary to fund the benefits of retirees and future retirees of the system. Based on the liability of the system, the actuary determines a percentage of payroll, or employer contribution rate, necessary to properly fund the required benefits. The actuary determines a different employer contribution rate for state employees, teachers, and each participating municipality.

9 9 What happens to the money that I contribute to the system? Once you are enrolled as an active member in the Employees or Municipal Employees Retirement System, an account is established in your name. Your employer deducts your retirement contributions and transfers them to the system, where they are invested. Contributing members can view their member account balance via their website account which contains the real time contributions credited to their individual account. How are my contributions invested? Your contributions to the Employees and Municipal Employees Retirement System of Rhode Island are deposited into a trust fund set aside for the exclusive benefit of the members of the retirement system and their beneficiaries. The investments of the fund are managed by the nine-member State Investment Commission (SIC), which is chaired by the General Treasurer. The other members of the SIC are the state s Director of Administration or designee, a director of the Higher Education Assistance Authority or designee to be appointed by the General Treasurer, an active or retired member of the retirement system (or union official) appointed by the General Treasurer, two members of the general public appointed by the General Treasurer and three members of the general public appointed by the Governor. Appointments by the General Treasurer and Governor are subject to Senate approval. The SIC meets monthly, but more frequently as needed, to review and analyze the investment performance of the state s pension fund.

10 10 Service and Purchase of Service Credit How do I receive credit towards my retirement allowance? Generally, the number of years you have worked and contributed to the retirement system will determine the amount of your retirement allowance. If you are a state or municipal employee, you will receive one year of retirement credit for each full year worked and contributed. Any reduction in hours may result in a reduction of service credit. Your posted position must be at least 20-hours-per-week and you must consistently work every week of the year at a minimum of 20-hours-per week. Casual or seasonal employment is excluded. If you are a teacher, you will receive a year of retirement credit for each school year in which you contribute and are employed at least 135 full days. Membership in other Participating Plans or Units Time spent within other participating plans or units of the retirement system can be used towards your eventual retirement. For example, if you were employed by both the Town of Bristol and the State of Rhode Island (not concurrently), you may count both service periods towards your eventual retirement. Municipal credit must have been earned within a participating unit of the Municipal Retirement System. Can I purchase retirement service credit? Yes, a member may be eligible to purchase retirement service credit for other types of employment, or periods where the member was on official leave or laid off from contributing employment. A total of five years of purchased service credit may be added to your total years of service, but as of June 16, 1991 for state employees and December 31, 1992 for municipal employees, all members must have ten years of contributing service in order to vest. Service credit purchases are not considered contributing service. The next few pages contain a description of some of the more common types of credit you may be eligible to purchase as a member of the Employees Retirement System (ERS) or Municipal Employees Retirement System (MERS). Restoration of Service Credit Withdrawal or Refund Payback If you return to membership after withdrawing your contributions upon separation from service, you may restore your credits after completing one year of service from the date of your return. You must pay into the system the amount you had refunded to you, plus interest. Purchase of withdrawn service credit is not limited to 5 years, and is not included in the 5-year purchase limit. Restoration of contributing service credit will effectively restore your retirement credit in the years it was originally earned, and restored contributing service does count as contributing

11 11 Official Leave of Absence You may purchase up to four years of credit for time spent on an official leave of absence from your employment. You must return to active employment for at least one year before you are eligible to make this purchase. MERS members must return to work immediately after official leave. For state employees and teachers, requesting this purchase after June 16, 2009, you must pay into the system the full actuarial cost of such time based on your age and salary at the time of the purchase request (see actuarial cost chart on page 12). For example, if your current salary at time of purchase request is $48,000 and you are 54 and looking to purchase one year of official leave of absence, the purchase cost under the new law will be $9,600 ($48,000 current salary X 20% actuarial factor based on current age of 54 = $9,600). For members of MERS, you must pay into the system the amount you would have contributed to the system, plus interest. Official Lay-off You may purchase up to one year of credit for time spent on an official lay-off, provided you were not on official leave without pay and did not withdraw your retirement contributions while laid off. You must return to service from the layoff (no termination of employment). For state employees and teachers requesting this purchase after June 16, 2009, you must pay into the system the full actuarial cost of such time based on your age and salary at the time of the purchase request (see actuarial cost chart on page 12). For members of MERS, you must pay the amount you would have contributed to the system for the lay -off, plus interest. Armed Service Credit If you served in the Armed Services prior to your employment as a public employee, you may purchase up to a maximum of four years credit for time spent on active duty for service in the US Armed Services or Reserves or the Merchant Marine. The purchase of credit is based upon 10% of your first full year of earnings. If you began your membership in the system after July 1, 1980, you may buy your military credits interest free provided they are purchased within your first five years of membership in the system.

12 12 Out-of-State and Private School Teaching If you are a public school teacher within the State of Rhode Island, you may be eligible to purchase up to five years of outof-state teaching or private school teaching time. You will be charged the full actuarial cost of such time based on your age and salary at the time of the purchase (see below chart). Credit for Service in a Non-Participating Municipality Members may purchase service credit for time spent within other municipalities within Rhode Island that are not part of MERS, provided the service credit is being used in only one retirement system. For example, you might be eligible to purchase time spent working for the City of Providence (which is not a MERS plan). You will be charged full actuarial cost based on your age and salary at the time of the purchase (see below chart). Other types of credit Other types of employment may also be eligible for purchase, but may depend on your current employment or other factors. Visit for information on other types of service credit purchases, or contact ERSRI. Actuarial Costs Age % Under and Over 24 When can I purchase creditable service? You must be an active member of the retirement system in order to purchase retirement credit. You cannot purchase time towards your retirement after you retire or terminate employment, or if you are an inactive member (non-contributing for more than one year).

13 13 Information on Service Credit Purchases No member may purchase more than five years of service credit as of January 1, Service credit purchases are not considered contributing service toward vesting. Time purchased for ERSRI service credit cannot be credited toward a pension in another retirement system. Restoration of contributing service credit is not considered a service credit purchase and is not subject to the five-year limitation. However, this service does count for vesting purposes. Wage and salary information for calculation of service credit purchases cannot be used for calculation of average salary for retirement benefits. Only salary earned and paid for performance of duty for covered employment shall be used for calculating average salary for retirement benefits. How do I purchase creditable service? The ERSRI website at contains a listing of the various types of service credit you may be eligible to purchase, and the corresponding request form for each type of purchase. Simply download the appropriate form for your purchase, have it completed by the employing authority or agency indicated on the form, and submit the completed form to the Retirement Office for processing. If you have questions about the purchase, you may contact ERSRI. What are my payment options? You may pay either by lump sum, payroll deduction via installment agreement, or rollover pre-tax dollars from a qualified plan (i.e. 401K). The payment selection made is irrevocable consistent with federal law. A member may not enter into an installment agreement and make a lump sum payment, nor may a member enter into a lump sum agreement and make installments. What if I am planning to retire and have an installment purchase in progress? If retiring, you must contact ERSRI in advance for the option of either pro-rating the installment agreement or being billed for the remaining portion. The employer s written confirmation of your termination will be required.

14 14 Refund & Rollover If I leave my job, can I take a cash refund or rollover my retirement contributions? Yes. If you leave or terminate from participating service for any reason other than death or retirement, you may apply to receive a cash refund of your contributions, or you may rollover to an IRA or another qualified retirement plan. Members receive no interest on the return of contributions from the retirement system. Cash refunds are subject to 20% federal withholding, and you may also be subject to an IRS penalty for early withdrawal depending on your age at the time of withdrawal. Normal processing of cash refunds is 35 days after date of termination, in order to allow posting of all retirement contributions to your account. If you wish, you may rollover your contributions to an IRA or another qualified retirement plan such as a 401k. Forms for rollover are available on our website at or by contacting the ERSRI call center. If you have created a user account on our website, you may simply apply online for your refund once you have terminated. Can I borrow against my retirement account, due to hardship? No. Rhode Island General Law allows a return of contributions only upon termination of employment. Members may not withdraw funds without terminating, nor may they borrow from their ERS or MERS account.

15 15 Your Retirement Benefit Eligibility When am I eligible for a retirement benefit? During 2005 and 2009, a series of reforms have modified the retirement benefit structure for state employees and public school teachers. With these reforms, schedule type has become an important factor in determining eligibility. To determine when you are eligible for a retirement benefit, keep in mind the following: What is Contributing Service? Each active member of the retirement system shall contribute an amount of his or her compensation required by statute in the form of deductions from compensation for services rendered. Each member will receive one year of contributing service credit for each full year worked and contributed (for teachers it is each school year in which a teacher worked and contributed at least 135 full days). With the exception of restoration of withdrawn contributions, purchased service credit is not considered contributing service. When will I be vested? Members are vested for pension benefits after they attain at least ten full years of contributing service as a contributing member of the employee s retirement system. Can I combine service for vesting? If you have prior contributing retirement service credit in the Municipal Employees Retirement System (MERS) from previous municipal employment, it will count for vesting with your ERS service credit, and vice versa, provided it is not overlapping employment. Service credit is combined when you retire, in the plan under which you retire. When will I be pension eligible? Members that are pension eligible are those that have met the specific requirements of statutes to retire and begin collecting a pension benefit (see eligibility outlined on pages 16-30), but at minimum must have at least ten full years of contributing service to be vested. The eligibility requirements for collecting your benefit vary depending on which benefit structure and plan you are in (ERS or MERS). If you withdraw from service before you have met the requirements to retire, but it was after you accumulated ten years of contributing service to vest and you left your contributions in the system, you may be eligible to receive a deferred retirement benefit when you reach age of eligibility (see page 43).

16 16 State Employees and Teachers Eligible for Retirement at September 30, 2009 Effective October 1, 2009, changes were enacted under H 5983Aaa, Article 7 Substitute A as amended in the 2009 legislative session. State employees and teachers that were pension eligible to retire at September 30, 2009 are not affected by the changes, even if they do not retire, except for changes relating to purchase of service credit and accidental disability. If you are currently receiving a monthly pension payment, none of the changes apply to you or affect your current pension benefit. How do I know if I was eligible to retire at September 30, 2009? For state employees and public school teachers it is important to first determine whether you are a Schedule A or Schedule B member. Who is Schedule A and eligible to retire at September 30, 2009? State employees (excluding Correctional Officers and MHRH Nurses) or public school teachers vested with at least 10 years contributing service by July 1, 2005 are Schedule A members. To be eligible, these members had to meet either Schedule A eligibility criteria by September 30, 2009 of 28 years of service credit at any age, or 10 years of contributing service credit at age 60. Members that met these criteria by September 30, 2009 remain Schedule A members and are not affected by the changes, even if they do not retire, except for changes relating to purchase of service credit and accidental disability. Who is Schedule B and eligible to retire at September 30, 2009? State employees (excluding Correctional Officers and MHRH Nurses) or public school teachers vested with at least 10 years contributing service after July 1, 2005 are Schedule B members. To be eligible, these members had to meet either eligibility criteria by September 30, 2009 of 29 years of service credit at age 59, or 10 years of contributing service credit at age 65. Members that met these criteria by September 30, 2009 remain Schedule B members and are not affected by the changes, even if they do not retire, except for changes relating to purchase of service credit and accidental disability.

17 17 What are my service credit rates if eligible at September 30, 2009? State Employees & Teachers Schedule A Schedule B Years 1-10: 1.7% Years 1-10: 1.6% Years 11-20: 1.9% Years 11-20: 1.8% Years 21-34: 3% Years 21-25: 2.0% Years 35: 2% Years 26-30: 2.25% Years 31-37: 2.5% Year 38: 2.25% What is the most my pension can be? The maximum percent of final average salary (FAS) that a state employee (excluding Correctional Officers and MHRH Nurses) or a public school teacher may achieve if eligible to retire at September 30, 2009 as either a Schedule A or Schedule B member are listed below. Schedule A Schedule B 80% FAS 75% FAS How much will I receive in retirement benefits? The amount of your retirement benefit will be determined by two factors: your years of creditable service and your final average salary (FAS). For Schedule A and Schedule B state employees (excluding Correctional Officers and MHRH Nurses) and public school teachers eligible to retire at September 30, 2009, the FAS is calculated using your three highest consecutive years. The service credit rates used to determine your benefit are based on your schedule type and the above chart.

18 18 State Employees and Teachers Ineligible for Retirement at September 30, 2009 Who is Schedule A and ineligible to retire at September 30, 2009? State employees (excluding Correctional Officers and MHRH Nurses) or public school teachers vested with at least 10 years contributing service by July 1, 2005 are Schedule A members. However, if these members did not meet the Schedule A eligibility criteria by September 30, 2009 of 28 years of service credit at any age, or 10 years of contributing service credit at age 60, they are now aligned with a new schedule type called Schedule AB. What are the service credit rates for Schedule AB members? For Schedule AB state employees (excluding Correctional Officers and MHRH Nurses) or public school teachers, who were ineligible to retire by September 30, 2009, the law change preserves all Schedule A service credit rates earned as of September 30, All service credit rates earned after September 30, 2009 are at the Schedule B rates (see chart on page 17). For example, if you are a Schedule AB state employee with 20 years of service credit at September 30, 2009, you would have preserved a 36% service credit factor using Schedule A rates for your first 20 years of service (Year 1-10 at 1.7% = 17% plus Year at 1.9% = 19% for total of 36%). This service earned as of September 30, 2009 becomes your frozen service credit. For your next year of service credit after September 30, 2009, you would earn 2.0% under the Schedule B rates for Year 21 for a total service credit rate of 38% by September 30, Who is Schedule B and ineligible to retire at September 30, 2009? State employees (excluding Correctional Officers and MHRH Nurses) or public school teachers vested with at least 10 years contributing service after July 1, 2005 are Schedule B members. However, if these members did not meet the Scheduled B eligibility criteria by September 30, 2009 of 29 years of service credit at age 59, or 10 years of contributing service credit at age 65, they are now aligned with a new schedule type called Schedule B1. For Schedule B1 members, there is also a reduced benefit eligibility at age 55 if you have at least 20 years of service; this is explained further on pages What about New Hires into the retirement system? New state employees (excluding Correctional Officers and MHRH Nurses) or public school teachers that become members of the employees retirement system after September 30, 2009 are Schedule B2 members. They are eligible to retire at age 62 with 29 years of service, or age 65 with 10 years contributing service. For Schedule B2 members, there is also a reduced benefit eligibility at age 55 if you have at least 20 years of service; this is explained further on pages

19 19 What are the service credit rates for Schedule B1 or Schedule B2 members? State Employees & Teachers Schedule B1 and Schedule B2 Years 1-10: Years 11-20: Years 21-25: Years 26-30: 1.6% 1.8% 2.0% 2.25% Years 31-37: 2.5% Year 38: 2.25% What is the most my pension can be? The maximum percent of final average salary (FAS) that a member may achieve for each schedule type are listed below. Schedule AB Schedule B1 Schedule B2 80% FAS 75% FAS 75% FAS How much will I receive in retirement benefits? The amount of your retirement benefit will be determined by two factors: your years of creditable service and your final average salary (FAS). For state employees (excluding Correctional Officers and MHRH Nurses) and public school teachers ineligible to retire at September 30, 2009 or new hires after that date (now called Schedule AB, Schedule B1, and Schedule B2), the FAS will be based on the five highest consecutive years of salary rather than the previous basis of three highest consecutive years. The service credit rates used to determine your benefit if you are Schedule AB are explained on page 18. The service credit rates used to determine your benefit if you are Schedule B1 and Schedule B2 are based on the above chart.

20 20 What Changes were made to Retirement Eligibility if I m ineligible to retire at September 30, 2009 or a new hire after that date? For State employees (excluding Correctional Officers and MHRH Nurses) and public school teachers who were ineligible to retire at September 30, 2009 or were new hires after that date (also known as Schedule AB, Schedule B1, and Schedule B2 as defined on page 18), the new law establishes a minimum retirement age of 62 for all members, except those Schedule B members (Schedule B1 and Schedule B2) who retire with less than 29 years of service; their retirement eligibility remains age 65 with a minimum of 10 years of contributing service credit. The law provides a proportional downward adjustment of the minimum retirement age of 62 based on years of service credited as of September 30, 2009* (also known as frozen service). It is important to note that a proportional downward adjustment of the minimum retirement age of 62 applies to Schedule AB members and only Schedule B1 members who retire with 29 or more years of service. Here is an example to help you understand how the proportional downward adjustment formula works. For simplicity, we are using whole numbers for age and years of service; however, eligibility calculations are done based on your exact age and years of service at September 30, Once you know your current benefit structure at September 30, 2009 as described on page 18, you are ready to determine your retirement eligibility under the new law. Let s take a Schedule A ERSRI member who began service with the state at age 33 and had 15 years of total service credit as of September 30, 2009 (also known as frozen service). As of September 30, 2009, this member was ineligible to retire under Schedule A because they did not meet the eligibility criteria of 28 years of service credit at any age, or 10 years of contributing service credit at age 60. This member is now called Schedule AB. Under the new law, the first step would be to determine the member s FIRST point of retirement eligibility under the laws in effect on September 30, *If you requested a purchase of service credit before September 30, 2009 and it is determined by ERSRI to be eligible to be purchased, it will be applied towards your service credit balance at September 30, 2009 and will aide in the calculations used to reduce retirement eligibility age from age 62 (or age 55 for Correctional Officers and MHRH Nurses).

21 21 In this example the FIRST date of retirement eligibility would be age 60 with 27 years of service. This member will not achieve 28 years of service until age 61. Therefore, the member reaches age 60 first. According to the proportional formula and the new minimum retirement age of 62, the adjustment to the member s minimum retirement age would look like this: Step 1: Divide the member s years of service as of September 30, 2009 (also known as frozen service) by the number of years required to meet the first point of retirement eligibility (when member would first be able to collect a benefit). In this example, it would be 27 years. 15 years 27 =.56 Step 2: Take the difference between the new minimum retirement age of 62 and the member s FIRST age of retirement eligibility under the laws in effect on September 30, 2009 which, in this example, is 60 years old = 2 Step 3: Multiply the fraction (.56) from Step 1 by the age difference in Step x 2 = 1.12 Step 4: Subtract the value in Step 3 from the age 62 minimum retirement age: = In this example, the new minimum retirement age for this member would be 60 years, 10 months and 17 days. When this member reaches this new minimum retirement age, he/she is pension eligible to retire and begin collecting a pension benefit. If this member leaves employment before minimum retirement age date is reached, he/she will have to wait for this age date to begin collecting a pension benefit. The ERSRI website has minimum retirement age calculators available online to determine estimates of your minimum retirement age as a result of the changes enacted under H 5983Aaa, Article 7 Substitute A as amended in the 2009 legislative session. To use the calculators, you will need to create an account online at our website For information on how to use the Minimum Retirement Age Calculator, you may view our Fall 2009 ecompass Newsletter available on our website.

22 22 Cost-of-Living Adjustment (COLA) State Employees and Teachers What is my Cost-of-Living Adjustment (COLA)? Schedule A Retirees (eligible to retire at September 30, 2009) A 3 percent compounded COLA is payable beginning the third January after date of retirement and every January thereafter. For example, if you are a state employee or public school teacher eligible to retire by September 30, 2009 and retire under Schedule A in August 2010, your first COLA will be reflected in your January 2013 pension benefit. Schedule AB Retirees For Schedule AB members (those state employees and public school teachers who were Schedule A and ineligible to retire at September 30, 2009), the law changes the COLA from 3 percent compounded annually to the COLA provided under Schedule B. It will be the lesser of 3 percent or the percentage of increase in the Consumer Price Index for all Urban Consumers (CPI-U) published as of September 30 of the prior calendar year and is compounded annually. COLA begins the month after the third anniversary date of retirement (See below Article 16 Substitute A law changes effective June 12, 2010). Schedule B, Schedule B1, and Schedule B2 Retirees Beginning the month after the third anniversary of the date of your retirement, the COLA is the lesser of 3 percent or the percentage of increase in the Consumer Price Index for all Urban Consumers (CPI-U) published as of September 30 of the prior calendar year and is compounded annually (See below Article 16 Substitute A law changes effective June 12, 2010). If you were ineligible to retire as of September 30, 2009 but become eligible to retire after June 12, 2010 (passage of Article 16 Substitute A at 2010 legislative session), this law will impact your COLA. If you were eligible to retire as of June 12, 2010, this law will not affect you. Under Article 16 Substitute A, a retiree s COLA will be the COLA provided under Schedule B as explained above, but the COLA will now only apply to the first thirty-five thousand dollars ($35,000) of retirement allowance, indexed annually, and shall commence upon the retiree s third (3rd) anniversary of the date of retirement or when he/she reaches age sixty-five (65), whichever is later. The thirty-five thousand dollar ($35,000) limit will increase annually by the percentage increase in the Consumer Price Index for all Urban Consumers (CPI-U) as published by the United States Department of Labor Statistics determined as of September 30 of the prior calendar year or three percent (3%), whichever is less. For more information, you may view our Summer 2010 ecompass Newsletter available on our website.

23 23 Retirement Eligibility for State Correctional Officers and State Registered Nurses

24 24 State Correctional Officers With recent reforms to pension benefits for correctional officers, schedule type has become an important factor in determining retirement eligibility. Effective October 1, 2009, changes were enacted under H 5983Aaa, Article 7 Substitute A as amended in the 2009 legislative session. Correctional officers that were pension eligible to retire at September 30, 2009 are not affected by the changes, even if they do not retire, except for changes relating to purchase of service credit and accidental disability. If you are currently receiving a monthly pension payment, none of the changes apply to you or affect your current pension benefit. Who is eligible to retire at September 30, 2009 (Schedule CO)? Correctional officers who have attained the age of fifty (50) years may be retired provided the member shall have completed twenty (20) years of total service within the department of corrections and who retires before October 1, 2009 or is eligible to retire as of September 30, 2009 are now aligned with a new schedule type called Schedule CO. These members are not affected by the changes, even if they do not retire, except for changes relating to purchase of service credit and accidental disability. Purchases of military and official leaves within the department count toward 20 years. Who is ineligible to retire at September 30, 2009 (Schedule C1)? For correctional officers who become eligible to retire on or after October 1, 2009, benefits are available once they have attained the age of fifty-five (55) and have completed at least twenty-five (25) years of total service within the department of corrections. These members are now aligned with a new schedule type called Schedule C1. Purchases of military and official leaves within the department count toward 25 years. For Schedule C1, the law provides a proportional downward adjustment of the minimum retirement age of 55 based on years of service credited as of September 30, 2009 (also known as frozen service). The ERSRI website has minimum retirement age calculators available online to determine estimates of your minimum retirement age as a result of the changes enacted under H 5983Aaa, Article 7 Substitute A as amended in the 2009 legislative session. To use the calculators, you will need to create an account online at our website For information on how to use the Minimum Retirement Age Calculator, you may view our Fall 2009 ecompass Newsletter available on our ERSRI website. What about New Hires into the retirement system (Schedule C2)? Correctional officers that become members of the employees retirement system after September 30, 2009 are called Schedule C2. These correctional officers are eligible to retire once they have attained the age of fifty-five (55) and have completed at least twenty-five (25) years of total service within the department of corrections.

25 25 What are the service credit rates for correctional officers? Correctional Officers Schedule C0, C1, C2 Year % Year % Year % Year % Year % Year % What is the most my pension can be? The maximum percent of final average salary (FAS) that a correctional officer may achieve is 80% for each schedule type listed below. Schedule C0 Schedule C1 Schedule C2 80% FAS 80% FAS 80% FAS How much will I receive in retirement benefits? The amount of your retirement benefit will be determined by two factors: your years of creditable service and your final average salary (FAS). Schedule CO FAS is calculated using your three highest consecutive years. Schedule C1 and Schedule C2 FAS will be based on the five highest consecutive years of salary rather than the previous basis of three highest consecutive years. For all correctional officer schedule types, the service credit rates used to determine your benefit are based on the chart above.

26 26 State Registered Nurses With recent reforms to pension benefits for registered nurses, schedule type has become an important factor in determining eligibility. Effective October 1, 2009, changes were enacted under H 5983Aaa, Article 7 Substitute A as amended in the 2009 legislative session. Registered Nurses that were pension eligible to retire at September 30, 2009 with 25 years at age 50 are not affected by the changes, even if they do not retire, except for changes relating to purchase of service credit and accidental disability. If you are currently receiving a monthly pension payment, none of the changes apply to you or affect your current pension benefit. Who is eligible to retire at September 30, 2009 (Schedule MO)? Registered nurses within the department of mental health, retardation, and hospitals (MHRH Nurses) who vested with at least 10 years contributing service by July 1, 2005 were Schedule A members. To be eligible to retire at September 30, 2009 as MHRH Nurses, these members must have attained the age of fifty (50) years and shall have completed twenty-five (25) years of total service within the department of mental health, retardation and hospitals (MHRH) and are now aligned with a new schedule type called Schedule MO. These members are not affected by the changes, even if they do not retire, except for changes relating to purchase of service credit and accidental disability. Purchases of military and official leaves in the department count toward 25 years. Who is Schedule A and ineligible to retire at September 30, 2009 (Schedule MAB)? MHRH Nurses who vested with at least 10 years contributing service by July 1, 2005 were Schedule A members. However, if these members did not meet the MHRH Nurse eligibility criteria by September 30, 2009 of age 50 with 25 years of total service credit within MHRH, they are now aligned with a new schedule type called Schedule MAB. To become eligible to retire on or after October 1, 2009 as an MHRH Nurse, you must attain the age of fifty-five (55) and have completed at least twenty-five (25) years of total service within MHRH. Purchases of military and official leaves in the department count toward 25 years. What are the service credit rates for Schedule MAB members? For Schedule MAB members, who were Schedule A and ineligible to retire as an MHRH Nurse at September 30, 2009, the law change preserves all Schedule A service credit rates earned as of September 30, All service credit rates earned after September 30, 2009 are at Schedule B rates (see chart on page 17). For example, if you are a Schedule MAB with 20 years of service credit at September 30, 2009, you would have preserved a 36% service credit factor using Schedule A rates for your first 20 years of service. This service earned as of September 30, 2009 becomes your frozen service credit. For your next year of service credit after September 30, 2009, you would earn 2.0% under Schedule B rates for Year 21 for a total service credit rate of 38% by September 30, 2010.

27 27 Who is Schedule B and ineligible to retire at September 30, 2009 (Schedule MB1)? MHRH Nurses who vested with at least 10 years contributing service after July 1, 2005 were Schedule B members. However, if these members did not meet the MHRH Nurse eligibility criteria by September 30, 2009 of age 50 with 25 years of total service credit within MHRH, they are now aligned with a new schedule type called Schedule MB1. For Schedule MAB and Schedule MB1, the law provides a proportional downward adjustment of the minimum retirement age of 55 based on years of service credited as of September 30, 2009 (also known as frozen service). What about New Hires into the retirement system (Schedule M2)? MHRH Nurses that become members of the employees retirement system after September 30, 2009 are called Schedule M2. They are eligible to retire once they have attained the age of fifty-five (55) and have completed at least twenty-five (25) years of total service within MHRH. What are the service credit rates if Schedule MB1 or Schedule M2 members? MHRH Nurses Schedule MB1 and M2 Years 1-10: Years 11-20: Years 21-25: Years 26-30: 1.6% 1.8% 2.0% 2.25% Years 31-37: 2.5% Year 38: 2.25%

28 28 What is the most my pension can be? The maximum percent of final average salary (FAS) that a MHRH Nurse may achieve for each schedule type is listed below. Schedule M0 Schedule MAB Schedule MB1 Schedule M2 80% FAS 80% FAS 75% FAS 75% FAS How much will I receive in retirement benefits? The amount of your retirement benefit will be determined by two factors: your years of creditable service and your final average salary (FAS). Schedule M0 FAS is calculated using your three highest consecutive years. The service credit rates used to determine your benefit are based on Schedule A rates (see chart on page 17). Schedule MAB FAS will be based on the five highest consecutive years of salary rather than the previous basis of three highest consecutive years. The law change preserves all Schedule A service credit rates earned as of September 30, All service credit rates earned after September 30, 2009 are at Schedule B rates (see chart on page 17 and example on page 26). Schedule MB1 and Schedule M2 FAS will be based on the five highest consecutive years of salary rather than the previous basis of three highest consecutive years. The service credit rates used to determine your benefit are based on the chart on page 27. The ERSRI website has minimum retirement age calculators available online to determine estimates of your minimum retirement age as a result of the changes enacted under H 5983Aaa, Article 7 Substitute A as amended in the 2009 legislative session. To use the calculators, you will need to create an account online at our website For information on how to use the Minimum Retirement Age Calculator, you may view our Fall 2009 ecompass Newsletter available on our ERSRI website.

29 Cost-of-Living Adjustment (COLA) Correctional Officers/MHRH Nurses 29 What is my Cost-of-Living Adjustment (COLA)? Schedule CO and Schedule MO Retirees (eligible to retire at September 30, 2009) A 3 percent compounded COLA is payable beginning the third January after date of retirement and every January thereafter. For example, if you are a state correctional officer or MHRH Nurse eligible to retire by September 30, 2009 and retire in August 2010, your first COLA will be reflected in your January 2013 pension benefit. Schedule MAB Retirees For Schedule MAB members (those MHRH Nurses ineligible to retire at September 30, 2009), the law changes the COLA from 3 percent compounded annually to the COLA provided under Schedule B. It will be the lesser of 3 percent or the percentage of increase in the Consumer Price Index for all Urban Consumers (CPI-U) published as of September 30 of the prior calendar year and is compounded annually. COLA begins the month after the third anniversary date of retirement (See below Article 16 Substitute A law changes effective June 12, 2010). Schedule C1, Schedule C2, Schedule MB1 and Schedule M2 Retirees Beginning the month after the third anniversary of the date of your retirement, COLA is the lesser of 3 percent or the percentage of increase in the Consumer Price Index for all Urban Consumers (CPI-U) published as of September 30 of the prior calendar year and is compounded annually (See below Article 16 Substitute A law changes effective June 12, 2010). If you were ineligible to retire as of September 30, 2009 but become eligible to retire after June 12, 2010 (passage of Article 16 Substitute A at 2010 legislative session), this law will impact your COLA. If you were eligible to retire as of June 12, 2010, this law will not affect you. Under Article 16 Substitute A, a retiree s COLA will be the COLA provided under Schedule B as explained above (i.e. Schedule MAB, Schedule C1, etc), but the COLA will now only apply to the first thirty-five thousand dollars ($35,000) of retirement allowance, indexed annually, and shall commence upon the retiree s third (3rd) anniversary of the date of retirement or when he/she reaches age sixty-five (65), whichever is later. The thirtyfive thousand dollar ($35,000) limit will increase annually by the percentage increase in the Consumer Price Index for all Urban Consumers (CPI-U) as published by the United States Department of Labor Statistics determined as of September 30 of the prior calendar year or three percent (3%), whichever is less. For more information, you may view our Summer 2010 ecompass Newsletter available on our website.

30 30 Municipal Employees (MERS) When am I eligible to retire? If you are a municipal employee, you may retire at any age with 30 years of service credit, or at age 58 with 10 years contributing service. What are my service credit rates? For Municipal Employees, you earn two percent (2%) for each year of service credit. What is the most my pension can be? The maximum percent of final average salary (FAS) that a municipal member may achieve is 75 percent. How much will I receive in retirement benefits? The amount of your retirement benefit will be determined by two factors: your years of creditable service and your final average salary (FAS). FAS is calculated using your three highest consecutive years. The service credit rates used to determine your benefit are based on two percent for each year of service credit. Cost-of-Living Adjustment (COLA) - Municipal Retirees Municipal retirees receive a cost-of-living adjustment only if the municipality from which the member is retiring has adopted a COLA provision. If the COLA has been adopted, it is 3 percent non-compounded effective on the next January following your retirement. For all retirees In all cases, prior to retirement you must sign a statement indicating that you have not been convicted of or pled guilty to any crime related to your public office or public employment, as defined in R.I.G.L. Section

31 31 Retirement Options Rhode Island General Law may allow you to choose from different pension payment options when you retire. The SRA Plus option is not available to any Police and Fire members, those applying for a Disability Retirement, MHRH Nurses, and any state employee, public school teacher, or correctional officer who has not completed at least ten years of contributory service on or before July 1, SRA Plan (Service Retirement Allowance), Option #1 (100% Survivor option), Option #2 (50% Survivor option), and SRA PLUS (Service Retirement Allowance Plus) are explained in the following pages. Note that all options use the SRA Plan as the base allowance figure. SRA Plan (Service Retirement Allowance) The SRA Plan allowance is based on your creditable service and salary as a public employee. All pension payments will stop upon your death. If you select the SRA Plan, you cannot change your retirement option after the date of retirement. On the following pages are examples of pension benefit calculations that determine the SRA benefit.

32 32 SRA Plan example Schedule A (vested as of 7/1/05) and eligible to retire at September 30, 2009 Ms. Ima Teacher is retiring with 28 years of service and three year final average salary (FAS) of $61,000. Based on the chart on page 17, we use the appropriate service credit rate percentages based on Ms. Teacher s years of service. Her first 10 years x 1.7% = 17.0% Next 10 years x 1.9% = 19.0% Next 8 years x 3% = 24.0% Total service credit rate = 60.0% 60% x $61,000 FAS (3 yr) = $36,600 annual benefit for life (service credit rate %) x (3 Yr FAS) = (SRA Plan benefit) = $3,050 monthly for life SRA Plan example Schedule B (vested after 7/1/05) and eligible to retire at September 30, 2009 Mr. Stately Worker will retire with 15 years of service at age 66 and three year final average salary of $51,000. Based on the chart on page 17, we use the appropriate service credit rate percentages based on Mr. Worker s years of service. His first 10 years x 1.6% = 16.0% Next 5 years x 1.8% = 9.0% Total service credit rate = 25.0% 25.0% x $51,000 FAS (3 yr) = $12,750 annual benefit for life (service credit rate %) x (3yr FAS) = (SRA Plan benefit) = $1, monthly for life

33 33 SRA Plan example Schedule AB (vested as of 7/1/05) and ineligible to retire at September 30, 2009 Mr. ERSRI Member at age 61 will retire with 28 years of service and five year final average salary of $60,000. Since Mr. ERSRI Member was a Schedule A member who was ineligible to retire by September 30, 2009 (with 15 years of service and age 48), the law change (effective October 1, 2009) preserves all Schedule A service credit rates earned as of September 30, All future service credit rates earned after September 30, 2009 are at the Schedule B rates (see chart on page 17). Based on the example downward adjustment calculations on page 21, the new minimum retirement age for Mr. ERSRI Member would be age 60 years 10 months and 17 days; therefore, he is eligible to retire at that age or later. Mr. ERSRI Member decides to retire at age 61. First 15 years of service earned as of September 30, 2009 is preserved at Schedule A service credit rates: His first 10 years x 1.7% = 17.0% (Schedule A) His next 5 years x 1.9% = 9.5% (Schedule A) Next 13 years of service earned after September 30, 2009 are based on Schedule B service credit rates: Next 5 years x 1.8% = 9.0% (Schedule B) Next 5 years x 2.0% = 10.0% (Schedule B) Next 3 years x 2.25% = 6.75% (Schedule B) Total service credit rate = 52.25% 52.25% x $60,000 FAS (5 yr) = $31,350 annual benefit for life (service credit rate %) x (5 Yr FAS) = (SRA Plan benefit) = $2, monthly for life

34 34 SRA Plan example Schedule B1 (vested after 7/1/05) and ineligible to retire at September 30, 2009 and new hires. Ms. Stately Worker will retire with 14 years of service at age 65 and five year final average salary (FAS) of $51,000. Based on the chart on page 19, we use the appropriate service credit rate percentages based on Ms. Worker s years of service. Her first 10 years x 1.6% = 16.0% Next 4 years x 1.8% = 7.2% Total service credit rate = 23.20% 23.20% x $51,000 FAS (5 yr) = $11,832 annual benefit for life (service credit rate %) x (5 Yr FAS) = (SRA Plan benefit) = $986 monthly for life Selection of the SRA Plan when you retire is final. You cannot change from the SRA Plan to any other pension payment plan after retirement.

35 35 Option #1/Joint and Survivor Full Option #1 provides that upon your death, your beneficiary will receive for his/her lifetime the same monthly retirement allowance as you received. In order to finance this benefit, there will be an actuarial reduction in your benefit amount, which is determined by the age difference between you and your beneficiary. This means you will receive a lesser monthly benefit amount than under the SRA Plan during your lifetime; however, your pension will continue to be paid to your beneficiary after you die. Should you select Option #1, you are given the right to change your retirement option one time only provided the retiree and the beneficiary have not divorced, but you are unable to change to SRA Plus. Option #1 factors are located on page 37. Option #1 example Ms. Teacher is considering designating her husband as her beneficiary for Option #1, and her husband is five years older than she. Ms. Teacher s SRA Plan benefit, as determined in the first example on page 32, is $36,600. To calculate, we use the Option #1 factor from the chart on page 37 for a beneficiary 5 years older = 86%, and Ms. Teacher s SRA Plan (option factor) x (SRA Plan annual benefit) = (Option #1) 86% X $36,600 = $31,476 = Option #1 benefit and Survivor benefit = $2,623 monthly for life Ms. Teacher will receive $31,476 annually or $2,623 monthly for life under Option #1. Upon her death, her spouse will also receive $31,476 annually or $2,623 monthly for life.

36 36 Option #2/Joint and Survivor Half Option #2 provides that upon your death, your beneficiary will receive for his/her lifetime a retirement allowance that is equal to half the monthly retirement allowance that you received. With Option #2, there is a lesser actuarial reduction than under Option #1. Should you select Option #2, you are given the right to change your retirement option one time only provided the retiree and the beneficiary have not divorced, but you are unable to change to SRA Plus. Option #2 factors are located on page 37. Option #2 example Ms. Teacher is considering designating her husband as her beneficiary for Option #2, and her husband is five years older than she. Ms. Teacher s SRA Plan benefit, as determined in the example on page 32, is $36,600. To calculate, we use the Option #2 factor from the chart on page 37 for a beneficiary 5 years older = 92%, and Ms. Teacher s SRA Plan (option factor) x (SRA Plan annual benefit) = (Option #2) 92% X $36,600 = $33,672 Option #2 benefit for Ms. Teacher = $2,806 monthly for life 50% of $33,672 = $16,836 Option #2 survivor benefit (half) =$1,403 monthly for life Ms. Teacher will receive $33,672 annually or $2,806 monthly for life under Option #2. Upon her death, her spouse will receive $16,836 annually (50%) or $1,403 monthly for life. Note on Changing Option #1 and Option #2 If you select Option #1 or Option #2 at the time of retirement, you have the right to change your retirement option one time only to either Option #1, Option #2 or the SRA Plan, provided that you and your beneficiary, if married at the time of your retirement, have not divorced or are not involved in divorce proceedings. The one-time change is not individual to each option; for example, if you have Option #1 and change to Option #2, your right to change has been exhausted. You may not change from Option #1 or Option #2 to the SRA Plus payment plan.

37 Option Factor Charts 37 Younger Beneficiary Chart Option #1 and Option #2 Beneficiary s Age Compared to Member s Age Same Age 1 year younger 2 years younger 3 years younger 4 years younger 5 years younger 6 years younger 7 years younger 8 years younger 9 years younger 10 years younger 11 years younger Percentage of Benefit Paid to Member Option #1 Option #2 81% 80% 79% 78% 77% 76% 75% 74% 74% 73% 72% 71% Older Beneficiary Chart Option #1 and Option #2 89% 89% 88% 88% 87% 86% 86% 85% 84% 84% 83% 83% Beneficiary s Age Compared to Member s Age Same Age 1 year older 2 years older 3 years older 4 years older 5 years older 6 years older 7 years older 8 years older 9 years older 10 years older 11 years older Option #1 Option #2 81% 82% 83% 84% 85% 86% 86% 87% 88% 89% 90% 91% Percentage of Benefit Paid to Member 89% 90% 90% 91% 92% 92% 93% 93% 94% 94% 95% 95%

38 38 SRA PLUS (Service Retirement Allowance Plus also known as the social security supplemental option is only available to Schedule A, Schedule AB, Correctional Officers vested on or before July 1, 2005, and Municipal retirees, excluding Police and Fire) SRA PLUS uses a national average (an estimate of the amount of Social Security an average person would receive at the age of 62) to calculate a supplemental amount of retirement benefit you would receive from ERSRI prior to attaining age 62. The month following your 62nd birthday, your SRA Plus benefit will be reduced by the full national average; not just the supplemental amount. This option is not affiliated with the Federal Social Security Administration. You will not be eligible to change your retirement option once you have chosen SRA Plus. The benefit stops upon the death of retiree. This option is not available to any Police and Fire members, those applying for a Disability Retirement, MHRH Nurses, and any state employee, public school teacher, or correctional officer who has not completed at least ten years of contributory service on or before July 1, SRA PLUS example Ms. Teacher is 58 at retirement and will turn 62 in Her pension benefit figured under the SRA Plan is $36,600. Using the chart on the next page, her age factor is 73%, and average Social Security estimate is $19,500. Here s how the SRA Plus is figured: Age Factor 73% x $19,500 = $14,235 SRA Supplement (age factor) x (Est. Social Security) = (SRA supplement) SRA Plan annual benefit $36,600 Add SRA Supplement $14,235 SRA Plus benefit = $50,835 annually or $4,236 monthly, until age 62. With 3% compounded COLA beginning 3rd January (2012) $50,835 + $3,095 COLA = $53,930 annual benefit with COLA At age 62, subtract estimated Social Security of $19,500 from annual benefit with COLA by age 62 $53,930 $19,500 = $34,430 annually or $2,869 monthly for life

39 39 Notes on SRA PLUS Option This option is not related to your participation in Social Security or any programs of the Social Security Administration (SSA). Regardless of what amount of benefits you might collect from the Social Security Administration and when you may collect them, your ERSRI or MERS benefit will reduce by the predetermined national average, beginning the month following your 62nd birthday. Estimates of Social Security benefits used by ERSRI to calculate adjustment of ERSRI pension benefits are general estimates and are not guaranteed by ERSRI nor the SSA. If you select SRA PLUS, you may not change your retirement option. SRA PLUS Chart Chart A SRA Plus Percentage Factors Chart B Est. Social Security Benefit at Age 62 Age at Retirement Factor Year Turn Age 62 Amount $15, $15, $16, $17, $17, $18, $19, $20, $21, $22, $22, $23, $24, $25,000

40 40 Reduced Benefit Eligibility Early Retirement Schedule B1 and Schedule B2 Only Reduced Benefit Eligibility for Schedule B1 and Schedule B2 Retirees (those vested after 7/1/05) who were not eligible to retire at September 30, State employees and public school teachers who are Schedule B1 or Schedule B2 members may retire at age 55 with 20 years of service credit, with a reduction in the benefit amount. The calculated benefit payable at age 65 will be actuarially reduced according to the number of months the member is under age 65. See the chart below, and the examples provided, following. Actuarial Early Retirement Factors Age Age Factor Age Age Factor % % % % % % % % % % Early Reduced Retirement For early reduced retirement, a member must have at least 20 years of service credit and be at least age 55. The member s regular benefit is calculated according to his or her years of service and final average salary (FAS). For Schedule B1 and Schedule B2, the FAS will be based on five highest consecutive years of salary. The benefit amount is then multiplied by the corresponding factor in the Actuarial Early Retirement Factors chart above, according to the member s age. The younger the member, the greater the reduction of the benefit.

41 41 Reduced Benefit Example #1 - Retiring at age 55 Jane Lane leaves state service at age 55 with 21 years of service credit as she was not eligible to retire at September 30, If she waits until age 65 to collect her benefit, with a five year final average salary (FAS) of $45,000 she will receive: SRA Plan, 21 years service = Schedule B1 service credit factor of 36% FAS (5 yr) = $45,000 x 36% = $16,200 annual benefit for life at age 65 (unreduced) Because she is retiring under Schedule B1 (vested after 7/1/05), she has the option of taking an early reduced retirement beginning at age 55. Jane considers taking a reduced benefit at age 55. Using the Actuarial Early Retirement Factors chart on page 40, if Jane retires at age 55 she will receive 34.9% of the benefit she would be entitled to collect under Schedule B1 if she waited until age 65. Applying the reduction factor for collecting the benefit at age 55, which is 34.9%, Jane would receive an annual benefit of: $16,200 x 34.9% = $5,654 per year at age 55 (SRA Plan annual benefit) x (Early Retirement Factor) = (Early Retirement benefit)

42 42 Reduced Benefit Example #2 - Retiring at age 60 The reduction to her benefit if she collects it at age 55 is more than she anticipated, so Jane now considers working until age 60. In this example, Jane will work until age 60 and will have 26 years, and an increased salary. Increases in service credit and salary will subsequently increase her benefit. Following are the calculations for Jane working until 60, earning 5 more years service credit and assuming 5 year FAS of $47,500 at that time: SRA Plan, 26 years service = Schedule B1 service credit factor of 46.25% FAS (5 yr) = $47,500 x 46.25% = $21,969 annual benefit for life at age 65 (unreduced) Apply the reduction factor for collecting the benefit at age 60, which is 57.9%, Jane would receive an annual benefit of: $21,969 x 57.9% = $12,720 per year at age 60 (SRA Plan benefit) x (Early Retirement Factor) = (Early Retirement benefit) To Reduce or Not to Reduce - Your Choice The early retirement option will not appeal to everyone, but it is an option for those who end their employment prior to age 65 with at least 20 years of service. Alternately, full benefits are available at age 65 for those who wish to terminate service prior to age 65 and wait until age 65 to collect their benefit.

43 Deferred Retirement 43 What happens if I leave my job, but I am vested and eligible for benefits upon reaching age of retirement eligibility? If you withdraw from service before you are of eligible age to collect your benefit, but after you have accumulated ten years of contributing service, you are eligible to receive a deferred retirement allowance. Provided you leave your contributions in the system, you may begin collecting a retirement benefit at age of eligibility depending on your schedule type (Schedule A, Schedule AB, Schedule B, Schedule B1, etc.) as explained on page 15 through 30 for state employees, public school teachers, correctional officers, and MHRH Nurses. If you are a municipal employee, you can retire at age 58. Any member who is leaving service right at point of vesting (10 contributing years) should contact ERSRI prior to termination, to receive confirmation of vesting in writing. If you leave prior to vesting, you will not have benefit eligibility. If I leave my contributions in the system until I reach age of retirement eligibility, will you automatically send me my benefit when I am eligible to start collecting? No. It is your responsibility to notify the ERSRI office about three to six months before reaching your age of eligibility to obtain the retirement paperwork required to process your pension. You may choose to apply online using our website at (see page 49), but you will still need to notify ERSRI of your intent to begin collecting your benefit. If you do not apply for your retirement benefit when you first become eligible, you will not receive any retroactive benefits to the date you reached the age of eligibility. Deferred benefits are payable beginning the day of your age of eligibility or the first of the month in which your completed application is received by ERSRI office, whichever is later.

44 44 Teachers Survivors Benefits What is Teachers Survivors Benefits Plan? The Teachers Survivors Benefits Plan (TSB) was created in response to teacher requests for a plan to leave benefits to their survivors. Teachers in participating school districts contribute to a fund, in lieu of Social Security, to provide benefits for their survivors in the event of their death. How do I Qualify to Leave Benefits for Survivors? First, you must have taught in a school district that participated in the TSB. Second, you must have been making contributions to the TSB for a period of at least six (6) consecutive calendar months prior to death or retirement. Which School Districts Participate in the TSB? Barrington East Providence North Smithfield Bristol Warren Regional Foster-Glocester Portsmouth Burrillville Glocester Scituate Central Falls Collaborative Johnston Smithfield Coventry Lincoln Tiverton Cranston Little Compton Westerly Cumberland East Greenwich Middletown Newport How Much Do I Contribute to the TSB? You and your employer each contribute $96 per year to the plan. The amount you contribute may change, subject to actuarial evaluation of the plan every few years. Who May Be Eligible to Collect Survivor Benefits? There are three categories of people who may be eligible to collect under the TSB (see R.I.G.L through for more specifics). A surviving spouse or domestic partner who is at least 60 years of age. Children of a deceased teacher (under age 18 or age 23 and full time student) or disabled child if disabled before age 18. Dependent mother or father of the deceased teacher.

45 45 May a Spouse or Domestic Partner ever lose a benefit? Yes, remarriage of a spouse or domestic partner or establishment of a domestic partnership negates the benefit. Is there a Cost-of-Living Adjustment (COLA)? Yes, a yearly cost-of-living adjustment for spouse s or domestic partner s benefits shall be based on the annual social security adjustment. What Types of Benefits Exist? Benefits have been designed for spouses or domestic partners, family, children, and parents. A survivor qualifies for spousal or domestic partner benefits upon attaining the age of sixty (60) years if he or she was living with the deceased teacher at the time of the teacher s death (See R.I.G.L for more specifics). Survivor benefits for families are payable to the surviving spouse or domestic partner of a deceased teacher if the spouse or domestic partner is caring for children of the deceased teacher who are under the age of 18, or are full time students under the age of 23. The spouse or domestic partner must have been living with the deceased teacher at the time of death. When the youngest child is over the maximum age, the spouse or domestic partner would then receive spousal or domestic partner benefits upon attaining the age of sixty (60) years (See R.I.G.L for more specifics). A teacher s children are entitled to receive survivor benefits if they were dependents of the teacher at the time of teacher s death, unmarried and under the age of 18 or 23 if a full time student. Disabled children, regardless of age, may collect survivor benefits if disabled before age 18 (See R.I.G.L for more specifics). If the teacher did not leave a surviving spouse, domestic partner, or child, the parents of the teacher may be eligible to collect survivor benefits. To collect, a parent must be at least sixty (60) years of age, a dependent of the deceased, and not entitled to Social Security benefits from his or her own earnings that would be equal to or greater than the survivor benefit (See R.I.G.L for more specifics).

46 46 What happens to my TSB upon my retirement? At the time of your retirement as an ERSRI member, you have a one time opportunity to elect to either 1. Maintain coverage by leaving contributions in the Teachers Survivors Benefit Fund, or 2. Discontinue coverage by electing a refund of your contributions to the Teachers Survivors Benefit Fund, plus interest. Calculating Your TSB Spouse, Domestic Partner, and Parent Benefits Benefits for spouses, domestic partners, and parents are calculated according to the teacher s highest annual salary: Highest Annual Salary Monthly Benefit* $17,000 or less $750 $17,001- $25,000 $875 $25,001- $33,000 $1,000 $33,001- $40,000 $1,125 $40,0001 or more $1,250 *A yearly cost-of-living adjustment for spouse s and domestic partner s benefits shall be based on the annual social security adjustment. Family and Children Benefits Survivor benefits for children and families are equal to the spousal or domestic partner benefit multiplied by a percentage that adjusts the benefit to the recipients. Recipients Multiplier Parent & 1 Child 150% Parent & 2 or More Children 175% One Child Alone 75% Two Children Alone 150% Three or More Children Alone 175%

47 47 Example Calculation: Our example will be a deceased teacher whose highest annual salary was $38,000. He was survived by his wife and one dependent child under age 18. Step One: Calculate the spousal benefit. Because his highest annual salary was $38,000, his spouse at age 60, is entitled to a payment of $1,125 per month. Step Two: Find the correct multiplier Since the teacher was survived by his wife and one child, they qualify for family benefits. The family benefit multiplier for a parent and 1 child is $150%. Step Three: Calculate the benefit $1,125 X 150% = $1, The parent and child would receive a total of $, per month. Once the child is 18 years old, or 23 if a full time student, the family benefit ends. When the spouse reaches age 60, she then may collect the spousal benefit of $1,125 a month, provided she is not remarried.

48 48 Beneficiaries Benefits Must I name a beneficiary? Every member of ERSRI or MERS, active or retired, is entitled to leave a death benefit to a beneficiary. If you do not name a beneficiary, the death benefit will be issued to your estate. To name beneficiaries, you can submit a Beneficiary Nomination Form available in the ERSRI Forms section of our website at To be valid, the completed form must be notarized and submitted to ERSRI. What is the death benefit? For ERSRI or MERS members, the death benefit is a one time payment of $800 per year of service, up to a maximum $16,000. This benefit is reduced 25% every year after retirement, but not below the minimum benefit of $4,000. Even if you select an option where your pension ends upon your death, your beneficiary is still entitled to a death benefit. If I die before I retire, what happens to the money I ve contributed to the system? If you have less than ten years of contributing service at the time of your death, your beneficiary will be entitled to a return of your contributions, in addition to the death benefit. If you have over ten years of contributing service (vested) and have named an OAP (Optional Annuity Protection) beneficiary, your beneficiary will have the option of receiving either a return of your contributions or a monthly annuity, in addition to the death benefit. A spouse or domestic partner is automatically offered this option provided the member had over ten years of service and the spouse or domestic partner was the designated beneficiary of the member s retirement account. What if I die shortly after I retire? No matter which pension benefit payment option you choose, your beneficiary is entitled to the death benefit. If you have chosen Option #1 or Option #2, your beneficiary will also receive his/her predetermined monthly survivor benefit. If you have chosen the SRA Plan or SRA PLUS and you die before an amount equal to your contributions has been returned to you through monthly benefits, your beneficiary will be entitled to a return of your unused contributions as well as the death benefit.

49 Applying for Retirement 49 Why not go Green? In an effort to go green, to save the environment and reduce expenses, ERSRI encourages you to apply for retirement online. How do I apply for my retirement online? Visit our website about three to six months prior to the date of your retirement. You can simply complete your online application on our website and generate your benefit estimate. You must first create your online member account and be sure you are eligible to retire. Once you have logged into your ERSRI or MERS account, go to My Retirement to complete the Retirement Application. You will be required to electronically submit the information necessary for processing your retirement. To activate your online retirement application, you must contact ERSRI for the Employers Certification of Retirement and Final Wages form (also known as the termination form). You need to read the disclaimer on page two, sign, date and give the termination form to your payroll/ human resource department not more than three months before retirement. You may also need to submit a copy of your birth certificate and your beneficiary s birth certificate if you choose either Option #1 or Option #2 or if you are a teacher with Teachers Survivors Benefits. To complete your online direct deposit choice, you will need to send ERSRI a voided check or bank savings statement. Once all the necessary information is submitted to ERSRI and your termination form is received from your employer, ERSRI can process your pension. What if my service credit in my online account is unaudited? If your service credit in your account on the website has not been audited or does not meet the requirements to retire, we strongly advise you not to terminate employment before receiving confirmation of service credit and your eligibility date from ERSRI. Do I need a counseling appointment? A counseling appointment is not required to retire. If you prefer an appointment, ERSRI offers group counseling at our Providence office. A benefit estimate and retirement forms are given at the group session. Schedule your appointment three to six months before retirement by contacting our call center at

50 50 In an effort to go green, ERSRI will provide one estimate and set of retirement forms per member. Please retain your forms as they can be used at any time. More than one appointment is not necessary. Your followup questions can be answered by our call center counselors. If future estimates are needed, you may generate estimates and retire online at When does my retirement become effective? Your retirement is effective on the first day following your date of termination or the first day of the month your online application or signed retirement application form is received in ERSRI office, whichever is later. When will I get my first benefit check? Allow 2-3 months for receipt of your first benefit check, which will be retroactive to the date of your retirement. Pension payments are issued in arrears at the end of the month. For example, your January pension payment will be issued the last business day of the month for the month beginning January 1 through January 31. Direct deposit is mandatory for all persons retiring after July Your first benefit check will be mailed to your home address, and subsequent pension payments will be electronically deposited to your account (either checking or savings). You may change your direct deposit choice any time by submitting to ERSRI a Direct Deposit Form available on our website. What information must I submit to ERSRI to retire? Information Required Where to Send When Employers Certification of Retirement and Final Wages If apply online, contact ERSRI for form Your Payroll/HR Department Not more than 3 months before termination 1.) Retirement application - Include voided check or bank savings statement 2.) Option Selection 3.) Teachers Survivors Benefits (if applicable) 4.) Basic Group Life Insurance (if applicable) 5.) Birth Certificate of member. Also need for survivor if select Option#1 or Options #2 or a teacher maintaining Teachers Survovors Benefits If apply online, information sent electronically, but still need to mail in voided check or bank savings statement and birth certificate. ERSRI - 40 Fountain Street Before last day of work Retiree Health Election (for state/teachers) Office of Employee Benefits Before last day of work

51 Pension Deductions 51 Will I have to pay income tax on my retirement allowance? Yes. You have to pay federal income tax on regular retirement benefits you receive from the State of Rhode Island. Rhode Island residents will be subject to Rhode Island state tax on pension benefits. If you reside in a state other than Rhode Island, check with your tax advisor regarding your state s tax regulations on retirement benefits received from ERSRI. Can I have income tax withheld from my retirement allowance? You may have federal and Rhode Island state tax withheld from your retirement allowance. To do this, you must complete the tax withholding section of your retirement application. Once you retire, the amount you have withheld may be changed at any time by adjusting your withholding taxes online by logging on to the secure member section of the ERSRI website at and make your necessary changes. You may also submit to ERSRI a Certificate of Withholding Preference Or Withholding Tax Change form available on our website. The Retirement Office is required by law to inform all benefit recipients that they may elect to have federal income tax withheld from their monthly benefit allowances. You may be subject to tax penalties on your retirement income if you fail to pay or withhold sufficient tax. You cannot have state income tax deducted from your retirement benefit for a state other than Rhode Island. Can I have other deductions, too? The Retirement Office will administer certain other monthly deductions from your pension, including the premiums for a health plan administered by the Office of Employee Benefits, state-sponsored basic group life insurance and cancer insurance if you are continuing a policy held as an active state employee. You may also have a deduction made to the Rhode Island Credit Union, even if you choose another financial institution for direct deposit of the balance of your pension benefit. How can I learn more about retiree health plans and costs? State employees and public school teachers may be eligible for health benefits. To learn more, you may visit our website Health Care Information link to or contact Office of Employee Benefits at

52 52 Post-Retirement Employment Can I go back to work after I retire? You may work full time for any federal agency, non-participating municipality, or private company. You may work on a limited basis for a participating Rhode Island municipality or Rhode Island public school system, or state school, college or university as follows: 75-day Rule for Working for a Participating Rhode Island Municipality You may work in a municipal position for a participating Rhode Island municipality for 75 full days (or 150 half days of 3 hours or less) in a calendar year. If you work in a municipal (non-certified) position in a school department, the 75 days will be counted on a school year basis, September 1 - August 31, for ease of reporting. 90-day Rule for Employment in Rhode Island Public Schools Teacher/Certified Re-Employment (includes teachers, administrators, guidance counselors, coaches, tutors): You may substitute in a Rhode Island public school for up to 90 full days (or 180 half days of 3 hours or less) in the school year ( generally September 1st through August 31st, but may vary between school departments). The literal meaning of substitute is utilized; you must be working in place of a regular employee who is absent. You may be employed to fill a vacant position for up to 90 full days (or 180 half days of 3 hours or less) in any one school year if the school certifies in writing to its collective bargaining units and ERSRI they have made a good faith effort to fill the position with a non-retiree. Calculating Days Worked for Part-time Teaching If you are a retired teacher and return to teach in a part-time position after you retire, the number of days worked is based on a standard school year and is calculated by the percentage of the position. For example, 2/5 equates to 72 full working days (2/5 x 180 = 72). You may not work more than.5 or ½ time, as that would exceed the 90-day limit. Teaching at a Rhode Island State School, College or University You may be employed by a state school, college, or university to teach a course, advise students, and/or coach for gross wages not to exceed $15,000 in a calendar year.

53 53 Teaching Driver Education or Motorcycle Driver Education If you are a retired state employee or teacher, you may teach driver education or motorcycle driver education, but you are subject to a gross wage limit of $15,000 in a calendar year. Registered Nurses If you retired from the state as a registered nurse, you may work on a per-diem basis at a state operated facility in Rhode Island (i.e. MHRH) as a registered nurse, with gross wages not to exceed $12,000 per calendar year. What you CANNOT do: Mixing and Matching There is no mixing and matching. You cannot work under the provisions of more than one statute, i.e., only one of the several employment possibilities is allowed with its specific restrictions. For example, you cannot substitute 90 days in a public school under the 90-day limit, and teach a course at CCRI under the $15,000 limit. Or, if you are working 75 days for a municipality, you cannot also coach or teach at a public school under the 90-day limit. Corporation, Consultant, and Third Party Employment You cannot do as a corporation, consultant, or as an employee hired by another party what you cannot do as an individual. Thus, if you are a consultant working in the school, you are still subject to the employment limitations and reporting requirements of any other retiree. While collecting your ERSRI or MERS benefit, you may only be employed in a Rhode Island public school, state school, college or university, or participating municipality if there is a provision for that reemployment in the retirement statues. You cannot be hired by a company that places you into a position from which you are otherwise prohibited, without suspending your benefit. For example, a retiree may not work for Company ABC in a position where he/she will be placed in state employment. State Employment Prohibited The only provision for returning to state service is the limited employment described above and on previous page under the $15,000 restriction for state schools and colleges. No other state employment is permitted under current retirement statutes. You cannot work for the state if you are collecting an ERSRI or MERS benefit, and you cannot work as a consultant, contract employee, or be hired by a company for state employment from which you are otherwise prohibited.

54 54 Special Projects and Miscellaneous Assignments If there is no provision in the statutes for the position you seek with an ERSRI or MERS employer, then you simply cannot accept that employment without suspending your retirement benefit. If you wish to have the position reviewed for conformance with the statutes, please submit a description of the position (provided from the employer) to ERSRI, and request a written determination. What you MUST do: Monthly Reporting Requirement for Post-Retirement If you return to work in any capacity allowed by the retirement statutes, both you and your employer must notify ERSRI monthly of your employment. ERSRI provides the reporting forms to all schools and participating municipalities, and the forms are also available to all retirees on our website at Click on the ERSRI Forms link on the left toolbar of our home page. The Monthly Notification of Post-Retirement Employment forms are updated as the provisions for post-retirement employment change. Please make sure you and your employer are submitting the most current version of the form, as it appears on the ERSRI website. What you SHOULD know: Post-Retirement Service Following Termination of Employment. 1. The employee must retire and terminate employment. This is a fundamental requirement of the 401(a) of the IRS Code. There should be a clear separation from service and subsequent re-employment that is not pre-arranged or so short in duration as to raise a legitimate issue of whether there has been a true separation. 2. Any employment or reemployment may begin no earlier than 30 days after retirement 3. Notice of the post-retirement employment or reemployment shall be sent monthly to ERSRI by the employer and by the retired state, teacher, or municipal employee. 4. No additional pension credits may be earned 5. No additional contributions shall be made by or on behalf of the retired member What if I exceed the post-retirement limit? Pension payments shall be suspended whenever the postretirement limits are exceeded. A termination notice will be required before your benefit can be reinstated.

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