Addendum #2 P19/10007L. Long Term Disability Plan

Transcription

1 March 13, 2019 Addendum #2 P19/10007L Long Term Disability Plan

2 PIMA COMMUNITY COLLEGE March 11, 2019 ADDENDUM NO. Two (2) Long Term Disability Plan This Addendum supplements and amends the original Specifications and shall be taken into account in preparing proposals, and become a part of the Contract Documents. In case of conflict between the original Specifications and this Addendum, this addendum shall govern. Careful note of this addendum must be taken by the offeror. ************************************************************************************************ RESPONSES TO QUESTIONS RECEIVED THROUGH THE DEADLINE OF Noon, Arizona Time on 03/6/2019 CLARIFICATION: The District has two retirement plans: the ASRS plan, which includes LTD, and the ORP (Optional Retirement Plan) that currently does not. The District wants to add an LTD plan similar to the ASRS plans for employees that elect the ORP plan. The account structures are different as are the vesting schedules. 1. QUESTION: My underwriter was curious to know why someone would opt out of the ASRS plan for this one? RESPONSE: The ASRS is a Defined Benefit Plan; the ORP is a Defined Contribution Plan. See the attached Plan Comparison and Retirement Plan Summaries. 2. QUESTION: Do the employees on this proposed LTD plan have LTD inforce now? Should we be looking at this as virgin or non-virgin coverage? RESPONSE: Virgin, see above. Vendor hereby acknowledges receipt of the above Addendum: AUTHORIZED SIGNATURE DATE COMPANY NAME v /11/2019

3 Comparison of ASRS and ORP Summary Contributions ASRS Defined Benefit Plan (Traditional Pension) Retirees are entitled to a monthly pension for the rest of their life based on a formula that factors in years of service and salary. Employees and the employer make matching contributions on a pre tax basis. ORP Defined Contribution Plan (TIAA 401a) Retirees receive distributions based on the amount that one has accumulated in the savings plan, through contributions and investment earnings. Employees and the employer make matching contributions on a pre tax basis. Investments Contributions for all employees are pooled and invested by professional asset managers in a diversified portfolio of assets stocks, bonds, real estate, etc. Investment portfolios consist of individual accounts for each employee. Employees make all investment decisions themselves, and can choose from a range of investment options offered. Long-Term Disability Long term disability coverage is included and may provide a monthly benefit to partially replace income lost if you are unable to work due to an illness or injury. This plan does not offer any long term disability benefits. Amount of Money in Retirement The monthly benefit is determined by a set calculation, based on years of service and pay at the end of one s career. If you leave the College prior to retirement, you may not be eligible for the employer matching funds. The money available in retirement is the amount that one has accumulated in the savings plan, through contributions and investment earnings. If you leave the College before you have reached your vesting date, you will lose the College s contributions. Withdrawal Options Upon retirement or separation from the College funds can be: Withdrawn (subject to taxes and penalties); Rolled over into a qualifying retirement account; or Left in the account for a future benefit. Upon retirement or separation from the College funds can be: Withdrawn (subject to taxes and penalties); Rolled over into a qualifying retirement account; or Left in the account for a future benefit. Lifetime Income Payouts are provided as a monthly income stream that is guaranteed for the remainder of the retiree s life. Plans are not required to offer a lifetime income option and typically pay out benefits on a set schedule or one time lump sum. Supplemental Benefits Spousal protections, disability benefits, group health insurance program and health insurance premium benefit are available. Supplemental benefits are not applicable and generally not available. Pima Community College Employee Service Center

4 Pima Community College Employees Mandatory Retirement Plan Summaries JULY 1, 2018 As a Pima Community College (PCC) retirement eligible employee, it is mandatory that you participate in either the Arizona State Retirement System (ASRS) or the Optional Retirement Plan (ORP). You have the option of electing the ASRS defined benefit plan or a defined contribution plan, i.e. the Optional Retirement Plan (ORP). Employees who are newly eligible to participate in the retirement program will have 30 calendar days from their hire date to decide whether to participate in ASRS OR elect to participate in the ORP. As Arizona State Retirement System is the default retirement plan, your decision to participate in the Optional Retirement Plan requires specific actions and paperwork. Note: your decision is irrevocable and permanent. ASRS The retirement program is a Defined Benefit Plan (you will be entitled to a monthly pension for the rest of your life, upon retirement) and the monthly pension amount is based on a formula that includes the time in the retirement plan (years of service plus any service purchased) and average monthly compensation. Members hired on or after July 1, 2011 will be eligible for normal retirement at age 65 or at: Age 62 with 10 years or more of credited service Age 60 with 25 years or more of credited service Age 55 with 30 years or more of credited service Note: Members hired on or before June 30, 2011 will be eligible for normal retirement at age 65, or at age 62 with 10 or more years of credited service, or at any combination of years of credited service and age, totaling 80 points. The greater the length of service and the greater the average monthly compensation, the greater the retirement benefit. Employees participating in the ASRS also participate in the ASRS sponsored Long Term Disability Plan (LTD). When an ASRS participant retires they have several options for choosing a retirement annuity (pension benefit) and are eligible to participate in the ASRS Group Health Insurance Program. You also may be eligible for the Health Insurance Premium Benefit, which is a subsidy to assist with insurance premium costs. For more information about the ASRS, please visit their website at: ORP Unlike the ASRS, the retirement benefits in the ORP are not calculated by a formula. Rather, the amount of the benefit is based on the value of the funds in each individual s ORP account at the time of retirement. The amount in the account will depend on contributions to the account and performance of the account over time. Similar to the ASRS, at retirement, an employee participating in the ORP may choose from a variety of annuity options. Unlike the ASRS, ORP participants will not participate in the LTD Plan while they are employed, and will not be eligible to participate in the ASRS Group Health Insurance Program when they retire. Retirement Plan Summaries Page 2 Interested employees may contact the TIAA representative, Mark Largent, (866) Ext or mlargent@tiaa.org, directly for additional information. For a complete description of the ORP please review the plan document at your MyPima Login; Employees; Intranet Guide;

5 Employee Service Center; Retirement. The Plan document defines the eligibility, terms of participation and contribution rates and is considered the governing document for the ORP. If there is any conflict between the ORP Plan document and any other document, including this communication, the ORP Plan document controls. CONTRIBUTION RATES Contribution rates structures vary slightly between the ASRS and the ORP. ASRS Contribution Rates In the ASRS, both the employee and PCC make contributions. The ASRS employee contribution rate is 11.64% of compensation for retirement benefits and 0.16% for the ASRS Long Term Disability (LTD) plan, for a total employee contribution rate of 11.80% of compensation. PCC contributes an additional 11.64% for retirement benefits and 0.16% to the ASRS Long Term Disability (LTD) plan for a total ASRS employer contribution rate of 11.80% of compensation. ASRS combined employer and employee contributions therefore equal 23.60% of compensation, 22.28% of which is for retirement benefits. ORP Contribution Rates As with the ASRS plan, both the employee and PCC contribute to the ORP. The employee contribution rate to the ORP will be equal to the total 11.80% mentioned above. However since the ORP does not include the ASRS LTD plan, the total contribution rate of 11.80% will go to the employee s retirement account. The employer contribution rate to the ORP will also be 11.80%. As such, the combined employee and employer contribution will be 23.60%, all of which is retirement. In sum, the contribution rates for 2018/19 will be: ORP ASRS Employee Contributions Retirement 11.80% 11.64% LTD 0.16% Total 11.80% 11.80% PCC Contributions Retirement 11.80% 11.64% LTD 0.16% Total 11.80% 11.80% Grand Total 23.60% 23.60% Retirement Plan Summaries Page 3 REFUND OPTIONS AT TERMINATION OF EMPLOYMENT (Prior to Retirement) Employee Contributions In both plans, employees can withdraw all of their contributions upon termination of employment and either roll the funds over into another qualified retirement plan or take the

6 money as taxable income in the year it is received (which may also subject the money to an additional 10% federal tax under current law). Both plans also allow employees to leave their funds in the plan upon termination of employment (before retirement), to allow the funds to continue to build up for retirement. Employer Contributions For members who have joined ASRS prior to July 1, 2011 and request a refund upon termination of employment or end of ASRS eligibility, employees vest in an increasing share of the employer contributions beginning after the fifth year of service, until the tenth year of service, when the employer contributions are 100% vested. Please note: Members who join ASRS on or after July 1, 2011, terminate service and request a refund from ASRS will not receive any portion of the employer contribution unless separation is due to reduction in force or position elimination. In the ORP, an employee vests in all of the employer contributions after the fifth year of service. If an employee was a participant in a defined contribution plan with a previous employer, they may request credit for former years of service. Please see the Optional Retirement Plan Application for Former Years of Service. Employer contributions may be rolled into another qualified retirement plan upon termination of employment or taken out of the plan as taxable income in the year it is received (which may subject the money to an additional 10% federal tax under current law). Employer contributions may also be left in the plans upon termination of employment before retirement. For employees enrolled in ASRS or the ORP prior to July 1, 2011, the following table compares the percentages of the employer contributions that are vested at various years of service. Only vested employer contributions would be available to the employee upon termination. Years of Service Credit ASRS ORP % 0% % 100% % 100% % 100% % 100% % 100% 10.0 or more 100% 100% For employees who enroll in ASRS or the ORP on or after July 1, 2011, the following table applies. Years of Service Credit ASRS ORP % 0% 5.0 Retirement 0% 100% Retirement Plan Summaries Page 4 ORP PLAN PROVIDER A committee of employees recommended that TIAA be selected as the plan provider in TIAA is currently one of PCC s providers for tax sheltered annuities and provides optional retirement plan services for the three state universities (UA, ASU, and NAU) as well as for Coconino and Yavapai Community Colleges. TIAA is a Fortune 100 financial services organization

7 with a good reputation and a long history of stability. With approximately $343 billion in total assets under management as of March 31, 2005, it is a major institutional investor and one of the world s largest retirement systems. TIAA provides retirement plans for more than 3.2 million participants at over 15,000 colleges, universities, hospitals and healthcare organizations, private and public elementary and secondary schools, museums, libraries, governments, and other nonprofit organizations. Employees choosing to participate in the ORP will have access to a widerange of products and services offered by TIAA. For more information about TIAA, please visit its web site at ENROLLMENT New eligible employees hired have the option of participating in either the ORP or the ASRS. The decision to participate in the ORP must be made within 30 calendar days after the effective date of eligibility, or the employee will be treated as having elected participation in the ASRS. Again the decision whether to participate in either the ASRS or the ORP is irrevocable and permanent. If you choose to participate in the ASRS, please follow the ARIZONA STATE RETIREMENT SYSTEM (ASRS) Online Enrollment Instructions sheet available in your Benefits Packet. Employees who elect the ORP must complete the Pima Community College ORP Enrollment form included in your benefits packet and the TIAA Application. Enrollment instructions for the ORP plan are available on the web at The access code required to enter the TIAA web page and complete their enrollment form is PIMADC. If you choose to participate in the ORP, PCC will forward to TIAA, on your behalf, all future employee and employer contributions, as described above. Eligible employees who elect to participate in the ORP will remain participants in the ORP throughout their employment with PCC. The decision to participate in Arizona State Retirement System or the Optional Retirement Plan is an important decision that should only be made after careful consideration. All employees are encouraged to review the two retirement plans and to consult with tax and other advisers before selecting the plan that best meets their financial goals.