Retirement Benefits for Public School Teachers

Transcription

1 Employees Retirement System of Rhode Island Retirement Benefits for Public School Teachers Last Updated April 10,

2 Overview of Retirement Benefits The Rhode Island Retirement Security Act (RIRSA) created a hybrid benefit structure for all teachers in service on or after July 1, The hybrid benefit structure consists of the established defined benefit structure as well as implementing a defined contribution retirement account for each teacher. The defined benefit plan will be referred to as the DB Plan. A teacher s defined contribution account will be referred to as the DC Plan. 2

3 Defined Contribution Plan (DC Plan) A teacher will contribute 5% of compensation to his or her DC Plan. The employer will contribute 1% to the teacher s DC Plan. A teacher who is employed in a position that does not participate in social security will contribute an additional 2% to his or her DC Plan and the employer will contribute an additional 2% to the teacher s DC Plan. A teacher will vest in his or her contributions immediately. A teacher will vest in the employer s contributions upon attaining 3 years of contributory service. o The three year vesting period includes service prior to July 1, 2012, therefore an active teacher on July 1, 2012 who has at least 3 years of contributory service is immediately vested in his or her DC Plan. For DC questions contact TIAA-CREF at or visit 3

4 Earning Contributory Service Credit as a Full Time Teacher Number of School Days Worked in a School Year Credit Earned Prior to November 18, 2011 Credit Earned On or After November 18, Year 1.00 Year Year Proportional Credit * Year Proportional Credit * Year Proportional Credit * Year Proportional Credit * 0-44 No Credit Proportional Credit * * Proportional Credit is based on the number of school days worked compared to the number of school days in a school year ( based on 180 days). 4

5 Vesting in DB Plan Retirement Benefits Teachers in service on or after July 1, 2012 vest upon completion of 5 years of contributory service. o Contributory service includes service prior to July 1, Therefore an active teacher on July 1, 2012 who has 5 years of contributory service is immediately vested. Teachers who do not have contributory service on or after July 1, 2012 vest upon completion of 10 years of contributory service. A vested teacher who attains his or her eligible retirement age may begin to collect a retirement allowance. 5

6 Retirement Age Eligibility for DB Plan Through legislation in 2009 and 2011, the General Assembly modified the eligible retirement age for teachers Legislative Changes Article 7 Retirement Age Did not impact teachers who were eligible to retire as of September 30, Established a minimum retirement age of 62 for teachers who had at least 10 years of contributory service as of July 1, 2005 with a downward proportional adjustment based on years of service as of September 30, Established a minimum retirement age of 62 for teachers who did not have at least 10 years contributory service as of July 1, 2005 and who retired with at least 29 years of service with a downward proportional adjustment based on years of service as of September 30, Established a minimum retirement age of 65 for teachers who retired with at least 10 years of contributory service after July 1, 2005 but less than 29 years of service. 6

7 Retirement Age Eligibility for DB Plan (cont.) 2011 Legislative Changes RIRSA Retirement Age Does not impact teachers who were eligible to retire as of June 30, Established a new retirement eligibility age for teachers that mirrors their Social Security Normal Retirement Age (SSNRA) not to exceed age 67. For teachers with at least 5 years of contributory service prior to July 1, 2012, the RIRSA age is proportionately adjusted downward based on the amount of service earned prior to July 1, There are provisions to accommodate those teachers close to retirement. *** EACH TEACHER HAS HIS OR HER OWN UNIQUE RETIREMENT ELIGIBILITY AGE.*** 7

8 Schedule A Teachers A teacher is Schedule A if: (1) He or she had at least 10 years of contributory service prior to or on July 1, 2005 AND (2) He or she met one of the following: (i) He or she was at least age 60 prior to October 1, 2009 or (ii) He or she had at least 28 years of service prior to October 1,

9 Accrual Rates for Schedule A Teachers Year(s) Earned Accrual Rates for Schedule A For Service Prior to July 1, 2012 Years 1-10 Years Years % per year 1.90% per year 3.00% per year Year % For Service on and after July 1, 2012, a Schedule A teacher will accrue at 1.00% per year with a maximum benefit of 80%. 9

10 Schedule A/B Teachers A teacher is Schedule A/B if: (1) He or she had at least 10 years of contributory service prior to or on July 1, 2005 AND (2) He or she did not attain at least age 60 prior to October 1, 2009 AND (3) He or she did not have at least 28 years of service prior to October 1,

11 Accrual Rates for Schedule A/B Teachers Accrual Rates for Schedule A/B Year(s) Earned For Service Prior to October 1, 2009 For Service October 1, 2009 June 30, 2012 Years % N/A Years % 1.80% per year Years % 2.00% per year Years % 2.25% per year Years % 2.50% per year Year % 2.50% Years n/a 2.50% per year Year 38 n/a 2.25% For Service on and after July 1, 2012, a Schedule A/B teacher will accrue at 1.00% per year with a maximum benefit of 80%. 11

12 Schedule B Teachers A teacher is Schedule B if: (1) He or she did not have at least 10 years of contributory service prior to or on July 1, AND (2) He or she had contributory service prior to July 1,

13 Accrual Rates for Schedule B Teachers Accrual Rates for Schedule B Year(s) Earned For Service Prior to July 1, 2012 Years 1-10 Years Years Years Years % per year 1.80% per year 2.00% per year 2.25% per year 2.50% per year Year % For Service on and after July 1, 2012, a Schedule B teacher will accrue at 1.00% per year with a maximum benefit of 75%.. 13

14 Calculating Percentage Accrued For each year of service credit earned after June 30, 2012, a teacher will accrue 1% of his or her average compensation. A teacher with service credit prior to July 1, 2012 will retain all of his or her accruals for the service he or she earned prior to July 1, All accruals earned after July 1, 2012 will be added to the total accruals earned prior to July 1, Accrual rates for service prior to July 1, 2012 will vary based on whether the teacher is considered Schedule A or Schedule B or Schedule A/B. 14

15 Service Credit Purchases Purchases for time periods prior to a teacher s hiring must be made within 3 years of his or her initial date of hire. Purchases for official periods of leave must be made within 3 years of the conclusion of the official leave. (A teacher must return to work one year before purchase of leave.) For time periods prior to July 1, 2012 purchases must be initiated by June 30, Purchases are at full actuarial cost (with the exception of restoration of service, military service and salary deferral aka pay reduction days ). Effective immediately, purchases for restoration of service credit, military service and deferral of salary are at 7.5% interest, compounded annually. All other purchases requested after June 30, 2012 are at a new full actuarial cost (uses a 6.5% discount rate) making purchases after June 30, 2012 more expensive. 15

16 Purchases in Progress If retiring with an installment purchase in progress, contact ERSRI to pro-rate installment agreement and bill you for the remaining portion which is payable upon receipt. Requires employer s written confirmation that you are terminating employment, before ERSRI will pro-rate agreement. Purchase requests must be made in the ERSRI office before date of termination. 16

17 Calculating DB Retirement Allowance Annual DB Retirement Allowance = Average Compensation o Average Compensation is the average salary of the teacher using his or her highest 5 consecutive years. o Schedule A teachers use the 3 highest consecutive years. o Anti-spiking laws implement an average compensation using the 10 highest consecutive years. (Only applies to certain teachers who are not eligible to retire as of June 30, 2012 and work less than full time for most of their career and work full time for 3 or more years.) X Total Percentage Accrued o Total percentage accrued cannot exceed 75% o Schedule A and Schedule A/B teachers cannot exceed 80% 17

18 Applying RIRSA The following will automatically apply : A teacher who was eligible to retire prior to July 1, 2012 using the laws in effect prior to RIRSA may retire at any time. A teacher who has earned at least 5 years of contributory service as of June 30, 2012 will receive a downward adjustment to his or her social security retirement age based on the amount of service he or she earned as of June 30,

19 Elective RIRSA Transitional Rules For teachers who were not eligible to retire as of June 30, 2012: Transition Rule 1: A teacher who has earned at least 20 years of contributory service and is within 5 years of reaching his or her eligible RIRSA retirement age may receive an actuarially reduced benefit. Transition Rule 2: A teacher who has earned at least 10 years of contributory service as of June 30, 2012 may elect to retire on his or her eligible retirement date as determined by the laws in effect prior to RIRSA s enactment (Article 7). o A teacher who elects this option will receive a DB Plan benefit that is calculated using his or her service credit and final average compensation as of June 30, o A teacher who elects this option will not accrue DB Plan benefits for any service or compensation on or after July 1,

20 DB Plan Retirement Options Retirement Option (Select at time of retirement) Amount Beneficiary Amount Modification of Option Selected SRA Full Benefit $0 Zero Permitted Option One ^Actuarially Reduced Benefit Beneficiary receives same amount after teacher's death. *Option 2 or SRA. Option Two ^Actuarially Reduced Benefit Beneficiary receives half the amount after teacher s death *Option 1 or SRA. SRA Plus (Only an option for Schedule A and AB teachers) Increases pension amount prior to age 62 AND reduced pension going forward $0 Zero Permitted ^ Actuarially Reduced Benefit based on difference in age between teacher and beneficiary. * One time change is permitted while living. The change of option form must be received by ERSRI prior to death. A Qualified Domestic Relations Order (QDRO) may order modification to a teacher s retirement option. 20

21 Death Benefits A teacher s designated beneficiary is eligible regardless of retirement option selected. Benefit is $800 per year of service, up to a maximum benefit of $16,000 with 20 years of service. Benefit reduces 25% each year after retirement to a minimum death benefit of $4,

22 Teacher Survivors Benefits Teacher Survivor Benefit (TSB) contributions are made by teachers employed in positions that do not participate in social security. This includes teachers employed in Barrington, Bristol-Warren, Burrillville, Central Falls, Coventry, Cranston, Cumberland, East Greenwich, East Providence, Foster, Glocester, Johnston, Lincoln, Little Compton, Middletown, Newport, North Smithfield, Portsmouth, Scituate, Smithfield, Tiverton, and Westerly. Teacher Contributions = $96.00 per year (or 1% of salary if less than $96.00) 22

23 Teacher Survivors Benefits (cont.) At retirement, a teacher gets a one time election to either: (i) discontinue coverage by receiving a lump sum refund of contributions with interest or (ii) maintain coverage by leaving the contributions in the TSB fund. In order for a survivor or dependant of a teacher to receive the TSB benefit the teacher must have been contributing to the TSB fund for a period of at least 6 consecutive calendar months prior to his or her death or retirement. Maintaining coverage provides up to a $1,250 monthly benefit for a spouse or domestic partner or up to $ for a dependant child. 23

24 Retirement Forms Beneficiary Nomination Form Send to ERSRI, 50 Service Ave, 2 nd Floor, Warwick, RI before your last day. Send the form NOW but no later than the last day of employment. Application for Retirement Send to ERSRI, 50 Service Ave, 2 nd Floor, Warwick, RI before your last day. Or apply online. ERSRI does not send a confirmation , so please call (401) to confirm we received your application. Option Selection Form Send to ERSRI, 50 Service Ave, 2 nd Floor, Warwick, RI before your last day. Teachers Survivors Benefit (If applicable) Send to ERSRI, 50 Service Ave, 2 nd Floor, Warwick, RI before your last day. Employees Certification of Retirement and Final Wages Send to your payroll/human resources department within 3 months prior to terminating employment. Retiree Health Care Election (if opt for health from state) Send to Office of Employee Benefits, One Capitol Hill, Providence, RI before your last day. 24

25 Beneficiary Nomination Form 25

26 Estimate of Benefits Form - Page 1 26

27 Estimate of Benefits Form Page 2 27

28 Application for Retirement Page 1 28

29 Retirement Application Page 2 29

30 Option Selection Form 30

31 Teachers Survivors Benefits Election Form 31

32 Employers Certification of Retirement and Final Wages-5 Form Page

33 Employers Certification of Retirement and Final Wages-5 Form Page

34 Cost of Living Adjustments (COLAs) Effective July 1, 2012 for ALL teachers Cost of Living Adjustments (COLAs) are suspended beginning July 1, 2012 and will be suspended for each year the funding level of the ERS (state employees and teachers), JRBT (judges) and the SPRBT (state police) as calculated in the aggregate (referred to as the Fund ) fails to reach 80%. A calculation of the COLA will be made each year the Fund has at least an 80% funding level. During the initial suspension period, a calculation of the COLA will be made every five years despite the Fund being below 80% funded. The first five year interval would begin January 1, The COLA will be calculated using the 5 year average investment return of the Fund minus 5.5%, with a floor of 0% and a cap of 4%. 34

35 COLAs (continued) A teacher becomes eligible to receive a COLA when he or she attains social security retirement age or 3 years after he or she retires using whichever date is later. When awarded, COLAs will be applied to an eligible teacher s first $25,000 of retirement allowance, indexed. When awarded, COLAs are applied to an eligible teacher s retirement allowance on the anniversary of the teacher s date of retirement (+ 1 month). 35

36 Receiving Your Pension Payment Your first pension payment will be received 2-3 months after retirement. (Payment is retroactive to date of retirement.) Your first pension check will be mailed to your home address. Each payment thereafter will be directly deposited to your bank account. An will be sent to you each month notifying you that your direct deposit stub is available online. Payments will be made at the end of each month for the month. 36

37 Creating an Online Account Go to to create an account. Your username will be your full address that was used when creating the account. We recommend using a personal address because a work address may be deactivated after you retire or change positions. After completing the registration, you will receive a confirmation containing a link to activate your account. You must click on this link before online access will be allowed. (You may have to check your spam or junk folder for the confirmation .) Once activated, you may log in by using your full address as the username and entering the password chosen when you created the account. If ERSRI creates the account for you, your password will be a temporary password provided by ERSRI. 37

38 Obtaining Your Article 7 and RIRSA Date To obtain your Article 7 and RIRSA age and date: Once you have logged on with your username and password click on My Account (note years of service (YOS) as of 9/30/2009) Click on where it says: If you are Schedule A Teacher and want to check your retirement eligibility: Click here If you are Schedule B Teacher and want to check your retirement eligibility: Click here This will link you to a Microsoft Excel sheet and you will be asked to input your date of birth, your service credit as of 9/30/2009 and your service credit as of 6/30/2012. The calculator will provide you your Article 7 and RIRSA dates. Note: Use Schedule A calculator if you are a Schedule A/B 38

39 Online Calculator Example 39

40 Post Retirement Employment Hired Post Employment As A Days Allowed Before Pension Suspension Gross Pay Allowed Before Pension Suspension Time Period State Employee 0 $0 N/A Registered Nurse N/A $12,000 Calendar Year Classroom Instructor, Academic Advisor, or Coach at a State School Or College N/A $15,000 Calendar Year Drivers Ed Teacher N/A $15,000 Calendar Year MERS Employee 75 (or 150 half days) N/A Calendar Year Teacher 90 (or 180 half days) N/A School Year Elected MERS official Unlimited * Unlimited * N/A Unpaid state or municipal board Unlimited * Unlimited * N/A Non Participating Municipality Employee Unlimited Unlimited N/A Any employment or reemployment may begin no earlier than 30 days after separation/termination from employment. * Unlimited except for those who previously worked and earned service credit an elected official or board member 40

41 Post Retirement Employment (cont.) Retirement contributions will not be deducted from your wages and you will not earn any additional retirement service credit for any post-retirement employment. It is your responsibility to ensure that while collecting a retirement benefit your employment does not violate any statutory restrictions. ERSRI must be notified on a monthly basis. You and the employer MUST report via form available at Teacher/Certified may substitute in Rhode Island public school for up to 90 days (or 180 half-days of 3 hours or less) per school year. Fill vacant position not to exceed equivalent of 90 days in school year. Before accepting position, must have school send letter to ERSRI and unions certifying good faith effort made to fill position with non-retiree. This includes coaching, tutoring and consulting. No mixing and matching. You cannot participate in more than 1 area that is limited by statute. Post-retirement provisions apply if you are a consultant or corporation or employee of another party. 41

42 Contact Information Employees Retirement System of Rhode Island (ERSRI) 50 Service Avenue, 2 nd Floor Warwick, RI (401) For inquiries regarding health benefits: Office of Employee Benefits One Capitol Hill Providence, RI (401) For inquiries regarding the DC Plan: TIAA-CREF