UNDERSTANDING YOUR RETIREMENT BENEFITS UNDER THE FRS PENSION PLAN PENSION PLAN MEMBER HANDBOOK

Transcription

1 UNDERSTANDING YOUR RETIREMENT BENEFITS UNDER THE FRS PENSION PLAN For FRS Members Enrolled Prior to July 1, 2011 Erin Rock, Interim Secretary 1 PENSION PLAN MEMBER HANDBOOK 2 1

2 RETIREMENT GUIDES 3 FRS.MYFLORIDA.COM 4 2

3 DISCLAIMER If questions of interpretation arise as a result of the attempt to make retirement provisions easy to understand, Chapter 121, Florida Statutes; Chapter 60S, Florida Administrative Code; and the Internal Revenue Code shall remain the final authorities. 5 FRS HISTORY FRS created in December 1970 (TRS/SCOERS Merger) Only one plan FRS Pension Plan Employee Non Contributory System (Jan. 1, 1975 June 30, 2011) Three percent Employee Contributions effective July 1, 2011 FRS Investment Plan offered beginning July 1,

4 THE TWO FRS PLANS Pension Plan Investment Plan My FRS Financial Guidance Line (866) Plan Choice Guidance EY Financial Planners Free, unbiased financial planning and counseling services Chat live with EY Financial Planner MyFRS.COM Access financial planning tools and resources 7 ELIGIBILITY FOR A FUTURE BENEFIT UNDER THE FRS PENSION PLAN Occurs when you become a vested member. Vested member means you have met the years of service required to be eligible to receive a future benefit under the plan. 8 4

5 VESTING FRS PENSION PLAN Members enrolled prior to July 1, 2001: Seven, eight or 10 year vesting Members enrolled on July 1, 2001 though June 30, 2011: Six year vesting Members enrolled on or after July 1, 2011: Eight year vesting Member Handbook Page 26 9 NORMAL RETIREMENT DATE Is when you are first eligible to receive an unreduced retirement benefit; and Is also when you are eligible to participate in the Deferred Retirement Option Program (DROP). 10 5

6 NORMAL RETIREMENT DATE All Service Classes; except Special Risk Age 62 or 30 years of service whichever occurs first. Special Risk Class Service Age 55 or 25 years of Special Risk Class Service whichever occurs first; or Combined total of 25 years of Special Risk Class service and military service purchased under the Wartime Military Service provisions and age 52. Member Handbook Page NORMAL RETIREMENT DATE DROP K 12 Instructional Personnel, may enter DROP at Normal Retirement or at anytime after reaching Normal Retirement and participate for a full 60 months. All others, unless you are eligible to defer your 60 month DROP participation period, your 60 month DROP participation period starts at your Normal Retirement date. 12 month election window 12 6

7 WHO CAN DEFER THEIR 60 MONTH DROP PARTICIPATION PERIOD? Special Risk Class Normal Retirement by years of service prior to age 52 All other Classes Normal Retirement by years of service prior to age month election window 13 WHO CAN DEFER THEIR 60 MONTH DROP PARTICIPATION PERIOD? Elected Officials May defer DROP entry until the next term of office but can only participate in DROP for 60 months or the length of that term of office whichever is less. Special Risk Members With service in other membership classes DROP Guide Page

8 WHAT IS DROP? You effectively retire under the Florida Retirement System (FRS) Pension Plan delaying termination for up to 60 months. Your monthly retirement benefits accrue in your DROP account while participating in DROP. Your DROP account earns an effective annual interest rate of 1.3 percent. Your Retirement benefit while in DROP receives an annual Cost of Living Adjustment (COLA). You are not subject to 3 percent employee contributions as a DROP participant. 15 UPON TERMINATION OF DROP DROP accumulation is paid in one of three ways: Lump sum payment, with 20 percent withheld for federal income taxes; Direct rollover to an eligible retirement plan; or Combined partial lump sum payment and direct rollover. A DROP termination packet is mailed three months prior to your DROP ending date (Forms DP Term & DP PAYT). 16 8

9 THE BENEFIT CALCULATION FORMULA Years of Service X % Value per Year X Average Final Compensation = Option 1 Gross Annual Benefit at Normal Retirement Divide by 12 = Gross Monthly Option 1 Benefit 17 YEARS OF SERVICE Is the total of all years and parts of years you worked in a covered position with an FRS employer plus any optional service credit that you purchase. 18 9

10 OPTIONAL SERVICE CREDIT Refunded Service Leave of Absence Wartime Military Service Must earn a year of creditable service after taking the refund to be eligible to purchase. Up to 2 years. Must have been authorized in writing by employer before or during the leave. Must have returned to work for one complete calendar month immediately after leave of absence. Form FR 28. Up to 4 years. Must have been employed in an FRS covered position prior to 1/1/1987. Must be active duty service during certain wartime military dates. Service cannot have been used under any other Pension Plan. DD OPTIONAL SERVICE CREDIT In State and/or Out of State Service May claim up to a combined total of 5 years of In state and Out of State service purchasable only as Regular Class service. Out of State Service Service performed as a public employee participating in a pension plan in another state, a political subdivision of another state. Service with the federal government or military may qualify as out of state service. In State Service Service performed as a public employee in Florida participating in a pension plan, including periods of employment in a charter school or in any nonpublic school or college in Florida that is accredited by the Southern Association of Colleges and Schools. Form FR 30 or DD

11 ACCRUAL VALUE PER YEAR OF SERVICE. Regular Class Service Age 62 or 30 years = 1.60% Age 63 or 31 years = 1.63% Age 64 or 32 years = 1.65% Age 65 or 33 years = 1.68% Senior Management Service Class = 2.00% Special Risk Class Service Service earned on or after July 1, 1974 = 3.00% Service earned prior to July 1, 1974 = 2.00% Elected Officers Class Service Judges and Justices = 3.33% All others = 3.00% 21 AVERAGE FINAL COMPENSATION (AFC) Average of your highest five fiscal years of salary. Fiscal Year is July 1 through June 30 Statute allows up to 500 hours of lump sum annual leave payout to be used in the calculation of the AFC. State agency employment limits as follows: Career Service employees Up to 240 hours of lump sum annual leave can be used in the calculation of your AFC. Senior Management and Select Exempt employees Up to hours 480 of lump sum annual leave can be used in the calculation of your AFC. Consult your Human Resource office

12 AVERAGE FINAL COMPENSATION (AFC) AFC Calculation of member retiring effective Jan. 1, 2017 Middle of fiscal year Fiscal Year Service Credit Salary Used in AFC Explanation $15, Annualized would be $30,000 therefore $15,000 would be used in the AFC $29, $ $27, $26, $12, Fiscal year salary was $25, times the percentage needed to make a full five fiscal years of salary =.50 service credit. $25,000 X.50 = $12,500 to be used in the AFC. Totals 5.00 years $137, ($137,500.00/5) = AFC = $27, BENEFIT FORMULA CALCULATION Member with all Regular Class Service at Normal Retirement: Average Final Years of Service X % Value/Year X Compensation 30 X 1.60% X $25, = Gross Annual Option 1 Benefit of $12, Divide by 12 = Gross Monthly Option 1 Benefit of $1,

13 BENEFIT FORMULA CALCULATION Member with all Special Risk Class Service at Normal Retirement: Average Final Years of Service X % Value/Year X Compensation 25 X 3.00% X $25, = Gross Annual Option 1 Benefit of $18, Divide by 12 = Gross Monthly Option 1 Benefit of $1, BENEFIT FORMULA CALCULATION Member with Regular and Special Risk Class Service at Normal Retirement both classes of service: Years of Service X % Value per year X AFC Option 1 Annual Benefit 25 years Special Risk X 3.00% X $25, $18, years Regular Class X 1.60% X $25, $2, Total Option 1 Annual Benefit Amount $20, Divide by 12 to get Monthly Option 1 Benefit $1,

14 EARLY RETIREMENT Service Retirement before Normal Retirement Date Benefit Reduced five percent for each year under Normal Retirement age or proportional share thereof. Special Risk Class Reduced from age 55. All other Classes Reduced from age BENEFIT PAYMENT OPTIONS Option 1: Lifetime monthly benefit to you. Option 2: Provides a reduced monthly benefit payment to you for your lifetime. If you die 10 years or more after retirement, no benefits are payable to your beneficiary. However, if you die within 10 years (120 months) of your effective retirement date, your beneficiary will receive a monthly benefit payment in the same amount you were receiving for the balance of the 120 month period (including any period of DROP participation). No further benefits are then payable. Beneficiary can be anyone

15 BENEFIT PAYMENT OPTIONS To be eligible for an Option 3 or 4 benefit payment option, beneficiary must be a qualified joint annuitant. Your spouse. Your parent, grandparent, or a person for whom you are the legal guardian, claimed as a dependent on your federal income tax. Your natural or legally adopted child who is either under age 25 or is physically or mentally disabled and incapable of self support (regardless of age). 29 BENEFIT PAYMENT OPTIONS Option 3: Provides a reduced monthly benefit payment to you for your lifetime and a continuing benefit to your joint annuitant. No further benefits are payable after both you and your joint annuitant die. Option 4: Lifetime monthly benefit to you. Upon the death of either you or your joint annuitant, the monthly benefit is reduced to 2/3 of the benefit payable while both were living

16 COST OF LIVING ADJUSTMENT (COLA) Retirees (including DROP participants) receive a COLA in their July benefit each year. All service earned through June 2011 receives a 3% COLA Service earned July 2011 and after 0% COLA Formula: Years of service through June 2011 divided by Years of service at retirement X 3%. Example: 26/30 X 3% = 2.60% 31 APPLICATION FOR RETIREMENT Apply up to six months prior Service Retirement Form FR 11 DROP DROP Retirement Application Form DP 11 Notice of Election to Participate in DROP and Resignation of Employment Form DP ELE 32 16

17 OTHER ITEMS REQUIRED TO COMPLETE APPLICATION Form FRS 11o Option Selection Form Form SA 1 Spousal Acknowledgement Form Birth Date Verification member and for Joint annuitant if you selected Option 3 or 4 (See BVR 1 Form) Copy of registered Marriage Certificate if you selected benefit payment option 3 or 4 and listed your spouse as your joint annuitant 33 FORMS ON WEBSITE: FRS.MYFLORIDA.COM 34 17

18 THE RETIREE PACKET Received just prior to receipt of your first benefit check Form W 4P Tax Withholding Certificate for Pension Payment Form DFS A1 26R, Direct Deposit Authorization Form HIS 1, Health Insurance Certification for Pension Plan Members 35 REEMPLOYMENT AFTER RETIREMENT During the first six calendar months of retirement or following your DROP termination date, you may not work for any FRS employer. If you do, you will void your retirement and you will have to pay back any benefits received including your DROP payout During the 7 th 12 th calendar months of retirement or following your DROP termination date, if your return to work for an FRS employer you must suspend your retirement benefit for the months you worked

19 REEMPLOYMENT AFTER RETIREMENT Renewed Membership Closed effective 07/01/2010. Any retiree initially reemployed with an FRS participating employer on or after July 1, 2010, will not be eligible to participate in any state administered retirement system. 37 IMPORTANT NOTICE Forfeiture of Benefits as defined by Florida Statutes (5) or If you commit a specified offense prior to retirement or while participating in DROP and you were either: Convicted by a court of competent jurisdiction; or Terminated from employment as a result of admitting to the commission of a specified offense You will forfeit ALL of your retirement rights and benefits! 38 19

20 FRS.MYFLORIDA.COM 39 FRS ONLINE LOG IN PAGE 40 20

21 FRS ONLINE My Account Modules All Members Profile Settings Update your password, address and security questions. Communication Preferences Electronic or paper. My Inbox Where you may view communication from the division. 41 FRS ONLINE ACTIVE MEMBERS History Summary Details of each year of service credit. Service Summary Summary of years of service credit. Beneficiary View or update beneficiary. Member Annual Statement (MAS) View, print or download. Current Estimate Create Estimate 42 21

22 FRS ONLINE DROP PARTICIPANTS DROP Information Provides your DROP account details and your DROP accrual monthly for your DROP participation period. Beneficiary View your beneficiary designation; change your beneficiary designation if you selected Option 1 or 2. To change your beneficiary under Option 3 or 4, contact the Division. 43 FRS ONLINE RETIREE SERVICES Account Information View your current or prior monthly benefit payment stubs/statements and 1099R Tax Form. View/change your Federal Tax withholding. Print a Pension Income Verification Letter. Beneficiary View your beneficiary. May change if you selected Option 1 or 2 Contact division to change your beneficiary under Option 3 or 4 (limited to two changes). Address Change To update your address. Direct Deposit Update your direct deposit information

23 CONTACTING THE DIVISION Telephone: Toll free Locally QUESTIONS AND ANSWERS 46 23