Planning for Retirement

Transcription

1 Thinking Ahead Planning for Retirement Points of Interest When Can I Retire How Do I Get Started Can I Afford to Retire Calculating Benefits How to Apply Service Purchase Unused Sick Leave Health Insurance Early Retirement Benefits Phased Retirement Work After Retirement Additional Sources of Contact When Can I Retire? Are you approaching or contemplating retirement from the Chandler Unified School District? If so, it is important that each employee obtain an overview of the retirement process, to learn about the many available benefits and options as well as to understand the qualification criteria. Arizona State Retirement System (ASRS) is a cost-sharing, defined benefit plan. Costsharing means that both the employee and the employer contribute to the member s retirement as an equal percentage of paid compensation. The monthly benefit is determined by the member s credited service and average monthly salary, not by the dollar contributed. Employee contributions are tax-deferred until the member receives a benefit or refund. The ASRS provides retirement, disability, health insurance, premium supplement and survivor benefits. When you retire is up to you. But generally the longer you work and contribute to ASRS, the greater your retirement benefit will be. You may elect to take a normal retirement How Do I Get Started? Three Years Prior to Retirement: You will probably want to start with the Arizona State Retirement Department. One to three years prior to your planned retirement, you are encouraged to educate yourself to the ASRS Defined Benefit Plan. To do this, call the ASRS Member Service Advisory Center to schedule a time for you (and your spouse, if desired) to attend a Group Meeting. Topics will include: How to read your benefit estimate. What annuity options, service purchase opportunities, post retirement work opportunities, and health insurance options are available to you. with a full benefit or an early retirement with a reduced benefit. Normal Retirement 80 Points: Normal retirement is the earliest you may retire with a full benefit, as calculated by the ASRS benefit formula. Normal retirement date occurs under the earliest of the following circumstances: 80 points Any combination of years of credited service and age totaling 80 At age 65 At age 62 with 10 years or more of credited service Early Retirement: If you are at least age 50 with five or more years of credited service, you may retire before you reach normal retirement. However, a reduction determined by your age and credited service is applied to your benefit, which stays at the reduced amount as long as you receive benefits. A schedule of Group Meetings is available on the Calendars page of the ASRS website, or call the Phoenix area office at or ContactUs@azasrs.gov. Retirement Seminar The Chandler Unified School District hosts an information session annually to review district benefits for retirees (Sick Leave, Early Retirement Part-time Employment Program, Health Insurance).

2 CHANDLER UNIFIED SCHOOL DISTRICT Do you have PAGE 2 access to health Is your insurance? house paid off? Can I Afford to Retire? At the Financial Planning Seminar, a district representative will assist you in answering this critical question: can you afford to retire and maintain your current standard of living? Our CFO, Joel Wirth, encourages those contemplating retirement to answer yes to at least one of these questions: Do you have 30+ years in the retirement system? Are you independently wealthy? Do you have 15+ years in the ASRS system and eligible for early Social Security? How Are ASRS Retirement Benefits Calculated? As a defined benefit plan, the ASRS computes retirement benefits based on your average monthly compensation and service credit according to the following formula: The formula shows that service and salary decide the member s benefit. The dollar amount contributed to the member s retirement in the defined benefit plan does not affect the member s benefit as it does in a defined contribution program. Total Credited Service x Graded Multiplier x Average Monthly Salary Total Credited Service: The period of your employment during which you are a member making contributions to the ASRS, plus any service purchased and credited to your account. multiplied by Graded Multiplier : A percentage set by statute. It is based on your total years of service at retirement. See the corresponding schedule to determine which percentage applies to your retirement calculation. multiplied by Average Monthly Salary: Determined by one of two calculation methods: the 36-month or the 60-month calculation. 36-Month Calculation: Required for members who began contributions to the ASRS on or after January 1, The ASRS averages your highest 36 consecutive months of salary within the last 120 months of service (excludes any termination payments). Credited Years of Service 0.00 to years 2.10% to years 2.15% to years 2.20% or more years 2.30% Graded Multiplier Example: 26 years Credited Service x. 022 (2.20%) x Average Monthly Salary Note: The average monthly compensation for members who began contributing before January 1, 1984 is automatically based on whichever calculation provides the greater benefit amount. 60-Month Calculation: For members who began contributing to the ASRS before January 1, The ASRS averages your highest 60 consecutive months of salary within the last 120 months of service. This includes base salary, additional contracts, overtime and any other form of compensation (inclusive of termination payments).

3 PAGE 3 PLANNING FOR RETIREMENT How Do I Obtain a ASRS Benefit s Estimate? A benefit estimate from the ASRS provides you with PERSONALIZED information about your retirement benefits and lists an approximate monthly amount you can expect to receive under each available option based on the benefit formula. You may obtain your benefit estimate by visiting and accessing the Online Retirement Benefit Estimator. You may also call to request that a benefit estimate be sent to you by mail. The ASRS pays a monthly benefit for the LIFETIME of the member. When you retire, you will be required to choose a retirement annuity option. Examples include straight life, 5, 10, or 15 year term certain, or Joint and Survivor options. Note: Be sure to carefully review your annual benefit statements prior to retirement and to notify the ASRS of any errors. When choosing a retirement date, you may retire as early as one day following your termination date or anytime thereafter. The termination date and retirement date CANNOT occur on the same day. How Do I Apply for Retirement? You have paperwork obligations to both your district and to the ASRS. Submit the four-page Application for Retirement to the ASRS no later than three to six months before the expected retirement effective date. As a member, you may contact the ASRS Member Services Division to obtain the application and estimate at any time. (Contains Beneficiary Section, Ending Payroll Verification, Federal and State Tax Withholding Forms, Direct Deposit, and Partial Lump Sum Retirement Distribution.) Note: You may cancel the retirement application at any time before the retire- Retirement will NOT be effective until the ASRS receives your completed application. What is a ASRS Service Purchase? ment effective date by written notification to the ASRS. Submit to your supervisor and District Human Resources the Employee Notice of Resignation form sixty days prior to retirement, if eligible. Forms accessible on district website. Members who began ASRS membership before January 1, 1984, will submit to the district an ASRS form for an estimate of any lump-sum payoffs that will be payable at termination and provide that information to the ASRS Member Services Division. This information is used to calculate whether the 60-month benefit calculation, with the termination payment, is to the member s advantage. The ASRS uses the district-provided Final Salary and Lump Sum Verification form to verify a member s termination date. Any service purchase must be completed PRIOR to retirement. Credited service is the measure of service towards retirement eligibility that a member earns for work covered by ASRS membership (ARS ). Arizona laws of 1996 expanded the credit service purchase options available to active members of the ASRS. You are eligible to buy credited service time if you are actively contributing to the ASRS or are currently receiving Long-Term Disability benefits as an ASRS member. The types of service that may be purchased : Reinstatement of previously forfeited (refunded) ASRS service Leave of absence without pay Service with another public employer within the United States Active duty military service, Military Reserve and National Guard Transfer of service credit from another Arizona State and Charter City Retirement Plans

4 PAGE 4 PLANNING FOR RETIREMENT How Do I Request and Purchase Service Credits? Members are limited to a single active service purchase request at one time for EACH of the categories of purchase. If eligible, you may request the purchase of previous service by calling the ASRS Member Services Division at in Phoenix or obtaining the application on the ASRS website. The ASRS will send you the necessary forms. After you have returned the required supporting documents, the ASRS will calculate the cost of the service(s) you have available for purchase. You may request the purchase of service under any of the available options by calling the ASRS or completing a service purchase request on the website, Once the request is submitted, you will receive acknowledgement from the ASRS. You have 90 days to submit any required documents. You will then receive a service purchase invoice with instructions on how to indicate your preferred method of payment. Arizona Statutes allows varied types of payment methods in purchasing service credits, including: Lump Sum Payment: The full or partial cost of the purchase may be made in after-tax payments. Rollovers: A transfer of monies from an eligible retirement plan or IRA to the ASRS. To be accepted, a rollover must meet specific criteria. Pre-tax Payroll Deductions: A Payroll Deduction Agreement (PDA) with IRS approval for pre-tax qualification and thereby reducing taxable income (after July 1, 2004 the request will include interest). A PDA is irrevocable and a binding contract. A member can also use all or any part of termination pay as a lump sum paid at the termination of employment to purchase service What Happens to my District Unused Sick Leave? The Chandler District Policy GCCA-R allows employees to be reimbursed for unused sick leave upon termination due to retirement, resignation, or death in accordance with regulations developed by the Superintendent. Reimbursement for unused sick leave is based upon the hours of unused sick leave multiplied by an hourly rate based upon the current substitute rate multiplied by a percentage which increases with length of service. What Health Insurance Benefits are Available? Any ASRS member who is receiving a pension payment is eligible for coverage through the ASRS group medical and dental insurance plan. Members may elect the ASRS programs at retirement, or change their election during an annual open enrollment period, or upon a qualifying event such as termination of employer group insurance under COBRA. The plan specifies that providers accept all pre-existing conditions when a member is retiring or transferring from an employer group plan. As part of your benefits of membership, the ASRS provides a health insurance premium benefit to supplement the cost of retiree health insurance. Retirees with five or more years of credited service who have health insurance through the ASRS or Unused Sick Leave Reimbursement At Separation 5 Years Service = 36% 10 Years of Service = 40% 15 Year of Service = 60% 20 Years of Service = 80% 25 Years of Service = 100% If the pay off is $5000 or more, the accumulated sick leave is converted into either a 1) 401-A or 403-b plan or 2) tax-free medical trust. their former employer are eligible for a monthly premium benefit, which is paid to the health insurer or your former employer." The Premium Benefit ranges from $75 to $215 per month, depending upon years of service and coverage selected. Example 1: ASRS Insurance ASRS Monthly Rate $ ASRS Subsidy <$150.00> Balance Due from Retiree $350.00

5 CHANDLER UNIFIED SCHOOL DISTRICT PAGE 5 Does the District have Early Retirement Benefits? Yes, Chandler District Policy GCQE currently specifies the Early Retirement Part- Time Employment Program (ERPEP) with the following qualifying criteria effective July 1, 2009: ERPEP policy applies only to employees hired prior to July 1, An employee must have a minimum of (20) years of contiguous full-time employment (30 or more hours per week) with a recorded satisfactory service in the district. The employee must have (80) points under the Arizona Retirement System guidelines or attainment of age fifty-five (55), but not older than Medicare eligibility age prior to commencement of participation in the ERPEP. The employee contemplating participation in the ERPEP will apply to the Superintendent in written form by April l. The employee must retire from ASRS and draw pension benefits to qualify for the ERPEP. Monetary compensation to ERPEP participants is based upon at least five (5) days of work during the fiscal year. Eligible participants will receive a reimbursement for out of pocket costs of health premiums. The district contribution to an ER- PEP participant s health insurance may not exceed $ per month. The reimbursement is distributed quarterly. Can I Continue District Health Insurance? Your district-paid employer group health insurance terminates at the end of your designated retirement month. The Consolidated Omnibus Budget Reconciliation Act (COBRA) requires employers to offer an option for terminated employees to continue health insurance benefits under the employers plan for up to eighteen (18) months. The employee who chooses to participate in ERPEP must enroll in an ASRS health plan immediately upon retirement. Employees participating in ERPEP may not continue district health insurance under CO- BRA. If you continue health insurance with the district health plan under COBRA for up to 18 months, ASRS will provide a monthly premium (subsidy) to the district which will be applied to your insurance premium. You will be responsible for paying any remaining balance. Prior to the termination of coverage under COBRA (18 months), the member must contact ASRS to transfer to the ASRS group plan. See your CUSD Health Benefits supervisor at time of retirement for more information. Example: CUSD Insurance COBRA COBRA Monthly Rate $ ASRS Subsidy <$150.00> Balance Due from Retiree $ What Options are Available Regarding my ASRS Account? When a member terminates employment with the district, the following options are available concerning his or her retirement account: Obtain a return (refund) of contributions Rollover pre-tax contributions to an IRA or another qualified retirement account Leave the retirement account on deposit with the ASRS in an inactive membership status for a future benefit If eligible, retire and begin drawing a retirement benefit If disabled, apply for long-term disability A refund is limited to the employee contributions and a portion of the employer contributions made on the members behalf, based on the total years of credited service accrued to the member s account, plus interest on the contributions amount. Employer contributions and interest become vested and are refunded based on the member s accrued ASRS service credit, including purchased service credit, according to the following table: Obtaining a refund has significant tax consequences to the employee.

6 CHANDLER UNIFIED SCHOOL DISTRICT PAGE 6 What is Phased Retirement? After terminating employment with the Chandler Unified School District, long-term and experienced staff members may be considered for continued employment through a third party employer. Individuals may be employed as a contracted employee and receive ASRS benefits simultaneously. Positions for which the staff member is qualified may be approved on a part-time or full-time capacity. Considerations : Assignments are based on district need. Assignments may or may not be in the staff member s currently held position. Participation in the program is guaranteed for one year only. Contracts reviewed annually pending reapplication. Contracted employees are expected to adhere to applicable district policies and procedures, work hours, meetings, school functions, and perform other duties required of regularly employed school district employees. Qualifications: Must be eligible to retire from the Arizona State Retirement System; have 80 points and been employed by the CUSD continu- ously for the last ten (10) years or be 62 years of age or older and employed by the district continuously for the last ten (10) years. Salary and Benefits: Salary will be equal to 75% of the ending base salary or hourly rate per the district salary schedules. (Base salary does not include stipend contracts, pay for performance or career ladder.) Contracted employees may be eligible for extra compensation positions and would be paid per the current extra compensation schedule. Certified contract employees may be eligible for district incentives as approved. Contracted employees will not be eligible for district health insurance but may purchase insurance through COBRA or ASRS group health plan. Contracted employees are eligible for liability coverage paid by the district. Application: Submit an application on district due date Attend a mandatory district meeting Employees must determine their own personal financial situation, consider state retirement benefits, and compensation from the private employer to determine whether this option is a benefit. Returning to Work After Retirement ARS allows members who retire on or after reaching normal retirement to continue working and all members who have truly terminated employment (no agreement to be rehired when they terminate) to resume working while still receiving retirement benefits as long as their employers agree that they will work either: Less than twenty (20) hours a week for any length of time, or Twenty (20) hours or more a week for no more than nineteen (19) weeks in any fiscal year and less than twenty (20) hours per week for the remainder of that fiscal year. Retirees must monitor their hours to ensure they fall under eligibility requirements. 20/20 Test:: Twenty (20) hours per week for at least twenty (20) weeks or more in a fiscal year. If the employer re-employs the member with the employer s intent that the member will meet the 20/20 criteria for membership, that member becomes an active member of ASRS at employment; the pension is suspended immediately and retirement contributions will be withheld from the member s wages. Returning to Work after Early Retirement: Before age 65, age 62 with 10 years of service, or before 80 points Member cannot return to work for the same ASRS employer without a break in service in order to comply with the IRS code, unless less than 20/20 test. Returning to Work after Normal Retirement and Being Retired 12 Months: Member may return to work or continue to work any amount of time and continue to receive pension benefits. Member must notify the ASRS and their employer in writing of their intent and not have If rehired by CUSD after retirement, employees reemployed as a new applicant with a maximum entry salary as determined by policy. Leave will be earned and paid off according to the policy.

7 Putting The Steps Together Call the ASRS Member Service Advisory Center to schedule your attendance at a Group Meeting ( ) one to three years in advance of retirement Attend the CUSD Retirement Information Session Gather additional information from the ASRS Getting Ready for Retirement Defined Benefit Plan guide (ASRS Website and the CUSD Planning For Retirement packet (CUSD Website ww2.chandler.k12.az.us) Determine feasibility of credited service time purchase through the ASRS If interested in Phased Retirement, must attend mandatory meeting. Check HR Bulletin and Staff Report for meeting announcements. Submit the Application for Retirement to the ASRS approximately three to six months prior to your ex- pected retirement date Notify your supervisor and the District Human Resources with the Employment Notice of Resignation and form sixty days prior to resignation Apply for participation in ERPEP if eligible Enroll in the ASRS Retiree Health Insurance program no later than 31 days prior or see the CUSD Benefits Specialist to participate in COBRA Contact Social Security for coverage and exclusion information at or the ASRS External Affairs Division if you need more information More personalized information is available by scheduling an individual pre-retirement meeting with the ASRS or the CUSD Human Resource /Benefits Department. Examine Work After Retirement options and requirements Additional Contact Information Chandler Unified School District Main Office CUSD Human Resources Department or 7663 Arizona State Retirement (Phoenix Area) Social Security District Administrative Office 1525 West Frye Road Chandler, Arizona Dr. Camille Casteel, Superintendent Joel Wirth, Chief Financial Officer Sandy Cooper, Assistant Superintendent of Human Resources Go to the ASRS Website at Try the CUSD Website at ww2.chandler.k12.az.us The information included in this brochure is subject to verification by AZ State Retirement. Information may be updated and/or revised without notice. October 30, 2008