FPPA Retirement Overview & Process Presented by LaRiea - - PowerPoint PPT Presentation

Presented by LaRiea Thompson, Justin Burkhardt, Ben Colussy

FPPA Retirement Overview & Process

Presenters and Panelists

Justin Burkhardt

Benefit Administrator

Chip Weule

Chief Benefits Officer

Ben Colussy

Benefits Director

LaRiea Thompson

Benefit Administrator

Agenda

l Member Account Portal l FPPA Defined Benefit Plan Overview l Preparing for Retirement

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If you are an active member;

l Review your contributions into the Defined Benefit

Plan or DROP account

l View your Fidelity account balances l Update beneficiaries l Run estimates: retirement estimates and service

credit purchase estimates

l Apply to purchase service credit l To sign up for MAP, FPPA needs to have a valid

email address on file

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Check Your Beneficiaries

l Beneficiary information for your Defined Benefit

accounts is available on the Member Account Portal (MAP)

l Active members can update beneficiary

information directly on MAP

l FPPA accounts with Fidelity: Beneficiary can be

updated at fidelity.com

– Currently, 51% of these accounts do not have a named

beneficiary!

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If you are a retired member or in DROP;

l Update your tax withholding and direct deposit

information

l Access to your “Awards Letter” if you are being

asked for proof of pension

l Download your annual 1099R when filing your

taxes

l Keep track of your current monthly benefit 6

What is a Defined Benefit Plan?

l A retirement plan with a pre-determined, lifetime

monthly retirement benefit

– Based on age, years of service credit, and

pensionable salary

– Ad hoc benefit adjustments may be awarded

annually

– Optional survivor benefits l FPPA Members’ Benefit Investment Fund – Pooled assets vs. Individual Account l FPPA is responsible for making sure assets are

available to provide lifetime monthly pension benefits

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FPPA Defined Benefit Plans

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Plan Overview

l Contributions into the Statewide Defined Benefit Plan

(SWDB) and Statewide Hybrid Plan (SWH) are in lieu

• f Social Security (unless you are in the Social

Security Supplemental Plan)

l Retirement formula is based on:

– Service Credit in the plan – Your Age – The average of your 3 Highest Base Salaries in the plan

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FPPA Defined Benefit Plans

l Members in SWDB earn:

– 2% for each year of service credit for the 1st 10 years – 2.5% for each year of service credit thereafter

l Members in SWDB – Supp SS earn:

– 1% for each year of service credit for the 1st 10 years – 1.25% for each year of service credit thereafter

l Members in SWH earn:

– 1.5% for each year of service

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Benefit Percentage Average of Highest 3 Years’ Salary (HAS) Annual Pension Benefit Monthly Pension Benefit

12

I

FPPA Defined Benefit Plans

l Highest Average Salary (HAS)

– Years do not have to be consecutive nor do they have to

be the last years

– We look over your entire career history to find your three

highest salaries in the plan

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Benefit Percentage Average of Highest 3 Years’ Salary (HAS) Annual Pension Benefit Monthly Pension Benefit

12 =

FPPA Defined Benefit Plans

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Benefit Percentage Average of Highest 3 Years’ Salary (HAS) Annual Pension Benefit Monthly Pension Benefit

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57.5% X $80,000 = $46,000 12 = $3,833

SWDB

The table above is an estimate and for illustrative purposes only. Based on 25 years of service and the standard monthly benefit

37.5% X $80,000 = $30,000 12 = $2,500

SWH

28.75% X $80,000 = $23,000 12 = $1,917

SWDB – Supp SS

Plan Overview

l Types of Retirement

– SWDB Plan: Normal Retirement: Rule of 80, age plus

years of service equals 80

– SWH Plan: Normal Retirement: 25 years of service and

at least age 55

– Vested Retirement: Payable at 55 with at least 5 years

• f service

– Early Retirement: Age 50 with at least 5 years of service,

• r 30 years of service

– Deferred Retirement: Normal/Vested can defer up to

age 65

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Deferred Retirement

l Deferred Retirement

– Member applies for retirement, leaves employment and

delays receiving pension payments

– Defer receipt of Normal or Vested Defined Benefit

Pension to as late as age 65

– Benefit increases due to delayed payment – Your benefit will be determined by the exact actuarial

tables and factors in effect at the time you begin to receive your benefit

14 You can either defer your pension or participate in DROP, you cannot do both

Deferred Retirement

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Age 55 / Normal Option

Defer to

$4,740 / Monthly Begin pension at age 55 Age 58: Age 60: Age 62: Age 65: $ 6,098 $ 7,242 $ 8,633 $ 11,326

The table above is an estimate and for illustrative purposes only

DROP Overview

l DROP (Deferred Retirement Option Plan)

– Retire from the plan and benefit is calculated – Continue to work for your employer – Pension payment directed into DROP account with

Fidelity

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Career Timeline

Salary

Member Contribution Employer Contribution EE Contr.

Ø Employer Contributions Stop Two Funding Sources:

• 1. FPPA Defined Benefit
• 2. Employee Contributions

DROP Account

FPPA Defined Benefit

• Continue to work and receive salary for

up to 5 years

Defined Benefit

Earning Service Credit

DROP Entry Date

ü FPPA Retirement Benefit has been determined ü Payment Option Selected

Before DROP

DROP Account Illustration

18 Pension Payment Choice Fidelity “DROP” Investment Account Funding Sources Option 1 – 100% Survivor Pension Payment Member Contribution Pre-tax funds $4,130 $483 X 12 (monthly) X 26 (pay periods) Member Pension $49,560 Member Contribution $12,558 Annual Total $62,118 x 5 (years) Pre-tax contribution total in 5 years $310,590 Note: Fidelity account is a self-directed investment account subject to earnings and losses.

The table above is an estimate and for illustrative purposes only.

Deferred Retirement vs. DROP

• Deferred Retirement

—

Defer receipt of a Normal or Vested retirement up to age 65

—

Benefit increases due to delayed payment

• DROP

—

Monthly benefit is deposited into DROP account at Fidelity

—

Benefit may increase due to ad hoc benefit adjustments (COLAs)

—

Continue to receive salary from employer

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DROP vs. No DROP

20 Age 55 / Normal Option Work to age 60 $5,080 / Month (60% benefit – 26 years) $7,260/ Month (72.5% benefit – 31 years) Pension –$60,966 Annually EE Contributions – $13,000 Annually

($73,966 Combined Annual Total)

2% Annual Raise TOTAL Pre-tax After 5 Years $369,830

(before earnings/losses)

Difference $2,180 a month

The table above is an estimate and for illustrative purposes only

Payment Options

l Normal Option l Option 1 – 100% Survivor l Option 2 – 50% Survivor l Option 3 – Last Survivor l Option 4 – 100% Survivor with Pop-Up l Option 5 – 50 % Survivor with Pop-Up 21

Payment Options Example

DESCRIPTION

Member and Survivor Benefit Survivor Only Benefit Member Only Benefit

NORMAL OPTION

$ 4,470.15 $ 0.00 $ 4,470.15

OPTION 1 - 100% SURVIVOR

$ 3,877.18 $ 3,877.18 $ 3,877.18

OPTION 2 - 50% SURVIVOR

$ 4,152.59 $ 2,076.30 $ 4,152.59

OPTION 3 - 50% LAST SURVIVOR

$ 4,332.42 $ 2,166.21 $ 2,166.21

OPTION 4 - 100% SURVIVOR WITH POP-UP

$ 3,827.34 $ 3,827.34 $ 4,470.15

OPTION 5 - 50% SURVIVOR WITH POP-UP

$ 4,123.85 $ 2,061.92 $ 4,470.15

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The table above is an estimate and for illustrative purposes only

Preparing for Retirement

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Tips to Strengthen Your Benefit

l Highest Average Salary

–

You must be on your employer’s payroll through June 30th in

• rder to include the current year in the Highest Average Salary

(HAS). Assuming there is no gap in service during those 6 months l Benefit Adjustments (a.k.a. COLA’s)

–

Increases may be granted by the FPPA Board and if awarded, are effective October 1 for retirees who have been on FPPA’s payroll for at least 12 months l Selecting a DROP Date

–

Choose a date at the beginning of a pay period 24

Retirement Income Planning

Considerations Prior to Retiring

l Defined Benefit Pension

– Payment Option – DROP Participation? – Defer?

l SRA, DROP and/or SWH-MP Balance (if

applicable)

– Distribution options including option to convert SRA,

DROP and/or SWH-MP into a monthly lifetime benefit.

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Retirement Income Planning

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Option to Purchase a Monthly Lifetime Benefit

WHEN: At retirement or at termination of DROP, whichever is later

l Increases monthly defined benefit pension, for you and your

beneficiary's lifetime, if applicable

l You may use all or a portion of the SRA, DROP and/or SWH-

MP Funds

–

Payment Option and COLAs apply

l Must be elected prior to the receipt of pension payments in

retirement or prior to terminating DROP

Process & Timing

📆 3 to 6 months prior to retirement date

• Schedule an appointment with one of FPPA’s Benefit

Administrators

• Appointments can be scheduled by phone or email

— (303) 770-3772 ext. 6400

— Generalbenefits@fppaco.org

• FPPA Benefit Administrators can run estimates for:

— Retirement — Service Credit Purchase — Converting SRA, DROP and/or SWH-MP to a monthly lifetime benefit — Deferred Retirement

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Process & Timing

📆 60 Days prior to your retirement date

• Schedule an appointment with the appropriate person

at your employer

• Complete an FPPA Defined Benefit System Retirement

Application

• Submit the application and supporting documents to FPPA

–

Once FPPA receives your application, it is reviewed for completeness

–

Your retirement calculation is prepared and submitted for internal review

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þ Documentation to Gather

q

A copy of your birth certificate and a legible copy of your driver’s license

q

A copy of your primary beneficiary’s birth certificate and a legible copy of their driver’s license

q

Documentation to verify any name change for you or your beneficiary such as a marriage license

q

Print a retirement application from FPPA’s website

– www.fppaco.org/forms-active-DB.html

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Retirement Process

Applying for retirement requires a few key steps:

1.

Complete and submit an application to FPPA via mail, electronic secure file, fax or FPPA office drop box

2.

Select a payment option (when requested by FPPA via email)

3.

Submit completed pension payroll forms if not entering DROP Generally, pension payments to DROP or retirement payments can begin once these steps are complete.

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Terminating DROP

📆 30 Days Prior to your separation date

• Contact FPPA or schedule an appointment with your employer

to receive your DROP Termination Packet:

—

Termination Agreement Form (signed by you and your employer)

—

May request an estimate for a monthly lifetime benefit conversion

§

Optional, using DROP and/or SRA funds

—

Pension Payroll Forms

§

Electronic Funds Transfer / Direct Deposit

§

Voided check or deposit slip

§

W-4P Pension Federal/State Tax Withholding

§

IRS Form W-9 (required for all benefit recipients) 31

Terminating DROP

• Setting the Separation Date

— Your DROP account will receive the pension payment the

same month you separate

— You will receive your 1st pension payment check following

the month of separation. Assuming all appropriate paperwork has been received in time by FPPA

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We Are Here for You

l Are you 2 years or less from retirement and have

questions?

l Are you planning on retiring within the next 6

months?

l Call one of our Benefit Administrators or set up an

appointment for a virtual consultation

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We Are Here for You

l What we can do for you:

– Provide retirement estimates for a variety of scenarios – Calculate the cost to purchase service credit and its

effect on your retirement

l Take the information and estimates we provide to

a financial advisor or invite them to our meeting

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l Reminders:

— Use Q&A tool in Zoom — Questions not answered today will be addressed either in

recorded version of this webinar or directly to the individual

— Specific reentry department questions will be addressed in

individual department meetings

• Contact us after the webinar:

— (303) 770-3772 or 1-800-332-3772

§ Extension 6400

— generalbenefits@fppaco.org

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Thank You! Any Questions?