Retirement Benefits Presented by: Ashley Ranger Financial Services - PowerPoint PPT Presentation

Retirement Benefits Presented by: Ashley Ranger Financial Services Specialist

Virginia Retirement System

Virginia Retirement System • Defined Benefit Plan • Membership is required for full-time employees • Monthly contributions guarantee a lifetime benefit

Membership • Plan 1 Members – Members with VRS service as of July 1, 2010 – HCS contributes employee share of contribution (5%) – No out of pocket cost to member – Unreduced retirement at 65 and 5 or 50 and 30 – Reduced retirement at 55 and 5 or 50 and 10

Membership • Plan 2 Members – Members with no VRS service as of July 1, 2010 – Employers may elect for member to contribute 5% employee share – Unreduced retirement at normal Social Security age and 5 or age and service = 90 (i.e. 55 and 35) – Reduced retirement at 60 and 5

Purchase of Prior Service • Prior service not credited to a member account • Types of service credit eligible for purchase: – Leave of Absence for military duty, education, birth or adoption of child – Refunded, active duty, public, and federal service – Non-covered service with a participating employer

Purchase of Prior Service • If purchased within three years of hire date, cost is 5% of creditable compensation • After the three-year period, the member’s cost will be based on a higher actuarial equivalent rate • Refunded service remains at 5%

Service Retirement • Retirement Payout Options – Basic – Survivor – PLOP – Advanced Pension Option • 60-90 days to process paperwork

Basic Benefit • Highest consistent benefit under the basic option • Beneficiary receives no ongoing monthly benefit upon retiree’s death

Basic Benefit Formula • AFC * 1.7% • Times Years of Service • Equals Annual Basic Benefit • Divided by 12 = Monthly Basic Benefit

Survivor Option • Reduction of basic benefit • VRS Options range from 10% - 100% • A retiree gets one amount & upon his death survivor gets X% of what the retiree was receiving

Survivor Option Example  Example:  Basic Option = $1200/month  75% Joint and Survivor Option = $1000/month  Upon the retiree’s death, the survivor will receive $750/month • If the retiree pre-deceases the “survivor”, the survivor collects the monthly benefit until they pass away • If the survivor “pre-deceases” the retiree, the retiree reverts back to the Basic Benefit

Partial Lump-Sum Option Payment (PLOP) • Eligible after 1,2, or 3 full years beyond earliest unreduced retirement date • Lump-sum distribution of up to 3 years • Reduces the basic monthly retirement benefit

Advance Pension Option (APO) • Temporary increase in the retirement benefit until retiree chooses to draw Social Security • VRS adds a % of the estimated SS to the basic benefit amount • VRS is reduced by 100% of SS at the time of collection • Provides a level income throughout retirement

Case Study • Gary Parker is a 55 year old educator. His wife, Carolyn, is 50 … 5 years younger. • Gary’s last year’s salary before retirement is $45,000 . • His highest average salary for three consecutive years is $43,702 . • He has 33 years of service as a Virginia Educator.

Annual Salary = $45,000 VRS Gary's Carolyn's Option Monthly Survivor Benefit Benefit Basic Benefit $ 2,043.08 $ ‐ 50% Option $ 1,819.83 $ 909.92 100% Option $ 1,640.58 $ 1,640.58 PLOP (36 mo) $ 73,551.00 One time lump sum $ ‐ $ 1,627.50 Monthly benefit APO (Until 62) $ 2,572.67 Before 62 $ ‐ $ 1,572.67 62 & after

CAUTION! Once your retirement date has passed, the Option chosen CANNOT be changed Rare exception – death of beneficiary or divorce with consent

Disability Retirement • Eligible as of 1 st day of active employment • Regular Disability • Work-related Disability • Retirement Payout Options – Basic Benefit – Survivor Option

Hampton Employees Retirement System

Hampton Employees Retirement System (HERS) • Full-time prior to July 1, 1984 • Full Retirement – 55 years of age + 25 years of service – 60 years of age + 5 years of service • Reduced Retirement – 55 years of age + 5 years of service – 50 years of age + 10 years of service

Hampton Employees Retirement System (HERS) • Basic Benefit – Highest consistent benefit under the basic option – Beneficiary receives no ongoing monthly benefit upon retiree’s death • Survivor Option – Reduction of basic benefit – 50% or 100%

Other Information

Post-retirement Benefits • Health Insurance Credit – 15 or more years of VRS service – Professional employees – $4 per year of VRS service • Cost of Living Adjustment (COLA) – July 1 of the second year of retirement • Life Insurance – Reduces until it reaches 25% of the value

Insurance • May remain on group plan until 65 • Must pay entire premium – 10 month premium, 12 month coverage – $617.41 – PPO, $576.14 – HMO • Spouse or family coverage costs more – Dental premiums remain the same

Unused Sick Leave • Option 1 – Payout of unused leave at $30 per day – Payout occurs on the next payroll following your resignation date – Taxable

Unused Sick Leave • Option 2 – Payout of unused leave at $30 per day to your 403(b) or 457 with ING – Payout occurs on the next payroll following your resignation date – Only FICA and Medicare taxes are withheld

Unused Sick Leave • Option 3 – Application of unused sick leave days towards health insurance premiums – Must have at least 100 sick leave days and be covered under HCS insurance – May apply in increments of 50, starting at 100 with no more than 300 sick leave days – Unused sick leave days may be applied for 10 years or until 65, whichever occurs first

Unused Vacation Leave • Unused vacation leave is paid at the daily rate as follows: – 0 – 5 years employment……24 days max – 6 – 10 years employment..…30 days max – 11 years + employment…….36 days max • All additional days will be rolled into sick leave

Working After Retirement • One full calendar month break prior to returning part-time (does not include summer) • Must not exceed 80% of normal work hours • May not perform all duties required at pre-retirement

Contacts Virginia Retirement System ING Contacts: P.O. Box 2500 Jacques Cureton Richmond, VA 23218 Bill Fitzgerald 1-888-827-3847 Pete Olenick www.varetire.org (757) 447-7211 Hampton Employees Retirement System Dianne Whistler 22 Lincoln Street - 7th Floor City Hall Hampton,VA 23669 Phone: (757) 727-6230 Hampton City Schools Ashley Ranger Financial Services Specialist (757) 727-2335 aranger@hampton.k12.va.us