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

• r divorce with consent

Disability Retirement

• Eligible as of 1st 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

• ccurs 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