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An Overview of MainePERS for Maine Association of Police

An Overview of MainePERS for Maine Association of Police. October 28, 2008. Defined Benefit Plan Disability Pre-Retirement Death Benefits ordinary death accidental death Group Life Insurance Additional Service Credit Purchasable Service Service Retirement Plan/Benefit Calculation

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An Overview of MainePERS for Maine Association of Police

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  1. An Overview of MainePERS for Maine Association of Police October 28, 2008

  2. Defined Benefit Plan Disability Pre-Retirement Death Benefits ordinary death accidental death Group Life Insurance Additional Service Credit Purchasable Service Service Retirement Plan/Benefit Calculation Deferred Compensation Plans Presentation Overview

  3. What is a Defined Benefit Plan and what does one provide? A retirement benefit that is sponsored by the Employer Retirement eligibility that is defined by the employee’s age and/or years of service A defined payment amount based on length of service and final average salary A retirement benefit that is permanent and guaranteed Maine Public Employees Retirement System

  4. Creditable Service A factor in the calculation of service retirement benefit Service Rendered Additional Service Granted Service Purchased MainePERS Terms

  5. Earnable Compensation Salary/wages paid for services rendered Hourly Wage Differential Pay Overtime Pay Longevity Pay Common exclusions Bonuses Accrual cash ins Expense Reimbursements or Allowances (phone/clothing) MainePERS Terms (continued)

  6. Cost-of-Living Adjustment (COLA) Annual increase or decrease in retirement benefits Based on Consumer Price Index Capped at 4% per year Granted in September each year once eligible MainePERS Terms (continued)

  7. MainePERS Disability Program One of the benefits available to members of MainePERS is the disability retirement program. • Members who have a long-term disability who are found eligible, receive a disability retirement benefit. • Creditable Service continues to accrue until return to employment or the point at which you change over to a service retirement. • To be eligible you must show that you have a permanent physical or mental incapacity. • Other eligibility requirements are available atwww.mainepers.org or by calling the Disability Unit.

  8. Ordinary Death Benefits Separate from Group Life Insurance benefits Benefit choices offered to your beneficiary(ies) depends on: Your status as a member at the time of death Your relationship to your beneficiary(ies) Benefit choices offered may include the following: Lump Sum Refund of Accumulated contributions Survivor Benefits (if applicable) Automatic Option 2 (if applicable) Pre-Retirement Death Benefits

  9. Accidental Death Benefits Death is the result of a job-related injury Apply only if your beneficiary(ies) are: A surviving spouse and/or Dependent children A dependent child is: Unmarried and under Age 18; or Unmarried and under Age 22 if a full-time student; or Any mentally or physically incapacitated progeny Pre-Retirement Death Benefits(continued)

  10. MainePERS Group Life Insurance Program Group Life Insurance Coverage is a separately funded program, administered by MainePERS and coverage levels include: • Basic coverage:Annual gross compensation • Supplemental coverage:One, two or three times basic • Dependent coverage:Up to $10,000 of coverage on spouse Up to $5,000 each dependent child

  11. Unpaid Leave of Absence • You earn a maximum of 30 days a year of creditable service during unpaid leaves of absence Military Leave of Absence • You may receive credit for up to 5 years of military service • To be eligible, you must meet all other eligibility requirements • You must not withdraw your MainePERS Contributions • You must provide MainePERS with a copy of your military discharge papers upon your return from leave Additional Service Credits

  12. Service credit for up to 90 days of unused, uncompensated sick and/or vacation leave accumulated as of final termination of MainePERS-covered employment For this purpose, a day equals 8 hours You cannot use accumulated “comp” time for this purpose Additional Service Credits (continued) Workers’ Compensation • Creditable service continues to accrue • You are required to pay MainePERS contributions on any earnings you receive for lost wages • MainePERS will deduct any contributions not paid, with interest, from any future service retirement benefit Using Unpaid Sick or Vacation Leave Accruals For Retirement

  13. Purchasable Service Credits Types of service credit available for purchase (subject to eligibility): • Active-Duty Military Service prior to MainePERS membership • Previously refunded MainePERS-service • CETA • Out of State Service • Non-Contributory Service Please contact the PLD Unit to inquire about eligibility requirements, costs and our flexible payment methods for purchasing service credit.

  14. Service Retirement Plan • Members with 25 years of creditable service as an active or inactive MainePERS-member are eligible to retire. Retirement benefits for members who retire with 25 years of service before Normal Retirement Age are reduced for early retirement • Members who reach normal retirement age as an active member and have accrued at least 1 year of service credit immediately prior are eligible to retire • Members who reach normal retirement age as an inactive member are eligible to retire if vested • Employee contribution rate is 6.5% of gross earnable compensation • The Plan may or may not include COLA PLD Member Regular Plan “A”

  15. Benefit Calculation Average Final Compensation (AFC) • Calculated using the three highest years of earnings • All earnable compensation is considered when determining the three highest years • PLD members may use up to 30 days worth of lump sum payment for unused vacation/ sick leave accruals in the calculation of the AFC. This is only for payments made at the member’s final termination from MainePERS- covered employment

  16. AFC Calculation Example: Member is a full time employee and retired effective January 1, 2009.

  17. AFC: $66,664.67 Creditable Service: 25 yrs Normal Retirement Age 60 AFC $ 6,664.67 ÷ 50 $ 1,333.29 Years of Creditable Service x 25 Yearly Full Benefit at Normal Retirement Age $ 33,332.33 Monthly value: $ 2,777.69 Benefit Determination

  18. Early Retirement The percentage of the service retirement allowance of a PLD member payable upon early retirement with 25 or more years of creditable service before normal retirement age shall be determined from the following table: Normal retirement age: 60 Age at % of Service Retirement Retirement Allowance 59 97.2% 58 94.5% 57 92.0% 56 89.7% 55 87.4% 54 85.3% 53 83.3% 52 81.4% 51 79.6% 50 77.9% 49 76.3% 48 74.8% 47 73.3% 46 71.9% 45 70.6% 44 69.4% 43 68.2% 42 67.0% 41 65.9% 40 64.9% Note: If you are within six months of your next birthday on your retirement day, we will consider you to be the age that will be attained on your next birthday when calculating your benefit.

  19. A Special Plan typically permits a member to retire earlier than a Regular Plan or entitles the member to a higher benefit accrual. A PLD may adopt a Special Plan to be applicable to all current service with that PLD or for future service only. The cost to convert all current service to an enhanced Retirement Plan (i.e. Special Plan) is paid entirely by the employer. A PLD may select one of four Special Plans for a specific classification of employees. If a member will receive a higher benefit under the provisions of a Regular Plan at the time of retirement versus the Special Plan, the higher benefit from the Regular Plan will be granted. Special Service Retirement Plans

  20. Special Plan 1 • Eligible to retire after 20 years of qualifying special plan service, with no reduction in benefit due to age. • 1/50 or 2.5% per year accrual for membership service. (20 years = 50% AFC) • Additional 2% of AFC for each year of eligible service beyond 20 years • 6.5% employee contribution rate • COLA/No-COLA

  21. Special Plan 2 • Eligible to retire after 25 years of qualifying special plan service, with no reduction in benefit due to age. • 1/50 or 2% per year accrual for membership service. (25 years = 50% AFC) • Additional 2% of AFC for each year of eligible service beyond 25 years • 6.5% employee contribution rate • COLA/No-COLA

  22. Special Plan 3 • Eligible to retire after 25 years of qualifying special plan service, with no reduction in benefit due to age. • 2/3 or 2.667% per year accrual for membership service. (25 years = 2/3% AFC) • Additional 2% of AFC for each year of eligible service beyond 25 years • 8% employee contribution rate through 25 years, 6.5% after 25 years • COLA/No-COLA

  23. Special Plan 4 • Eligible to retire after 25 years of qualifying special plan service, with an age requirement of 55. • 1/50 or 2% per year accrual for membership service. (25 years = 50% AFC) • Additional 2% of AFC for each year of eligible service beyond 25 years • Approximately 2-1/4% per-year reduction for early retirement (prior to age 55) • 7.5% employee contribution rate through 25 years, 6.5% after 25 years • COLA/No-COLA

  24. Conversion Process Between Regular Plan A Service and Special Plan 2 Service A member who has accrued service credits under a Regular Plan may use those service credits at the rate of three years of Regular Plan service as two years of service credit toward qualifying to retire under Special Plan 2, 3, or 4. (The conversion of service from a regular plan to special plan 1 is 1:2) Example: At age 35 an officer with 10 years of regular plan service moves to special plan 2. (If continued under plan A he would qualify to retire @ age 50 with 25 years of service and the benefit would be reduced for age.) The 10 years of Regular Plan service converts to 6 years and 8 months of service under Special Plan 2 for retirement qualification purposes. He must work another 18 years and 4 months under special plan 2 to qualify to retire under the special plan. He retires at age 53 with no reduction in benefit for age. Special plan calculation-- based on an AFC of $50,000, annual benefit = $25,000. or, Split calculation-- based on each plan and reducing the regular plan portion of benefit for age, annual benefit = $23,573.

  25. Changing Special Plans Moving from Special Plan 2 to Special Plan 1 for future service only-- What happens to the service already accrued under Special Plan 2? Service previously rendered under another Special Plan is transferred to the new plan for qualification purposes, based on the percentage of eligibility of the previous plan met while under that plan. (See pages 11 - 13 of the PLD Member Handbook for more information on the conversion process.) Example: 12.5 years of service under special plan 2= 50% of the eligibility for that plan. Upon transferring to Special Plan 1 the member only needs to complete 50% of that plan; i.e., 10 more years of service to qualify to retire.

  26. Employment Changes That May Affect Your MainePERS Benefits Before leaving your current employer, consider the new employer for whom you will be employed. • Is the new employer part of MainePERS? If so, under which group? State, Teacher or PLD? • If the employer qualifies as a local district, are they a PLD? • Is your new position with your new employer, or current employer, covered under MainePERS? • If considering a position that is covered under the State or Teacher group, how will that affect your MainePERS service retirement benefit and disability benefit coverage?

  27. When you are ready to retire… Choose a retirement date Request a Benefit Calculation Estimate 6 to 12 months prior to retirement Review your estimate, then call MainePERS to: Schedule an appointment to attend a Retirement Counseling meeting (recommended) or Request a Retirement Application Packet Review your Retirement Application packet Select a Benefit Payment Option Complete your Retirement Application and file it with the Retirement System Retirement Process (Applications are accepted up to 12 months prior to your retirement date but should be filed at least 30 days before.)

  28. When you retire, you will need to select one of the nine benefit payment options available Full benefit option – maximum benefit, no beneficiary after retirement Benefit payment options 1 through 8 – reduced benefits, each option offers a different way to provide for a beneficiary or beneficiaries after retirement For married retirees, a certified Spousal Notification is required if the full benefit option or any other option is selected and the spouse is not named as the beneficiary Benefit Payment Options

  29. What is MaineSTART? MainePERS 457 Deferred Compensation Program • Low cost investment options • Easy investment selection • MainePERS Board of Trustees’ oversight • Coordinated retirement savings

  30. Thank you for attending today's session! If you have additional questions, please contact us. Maine Public Employees Retirement System 46 State House Station Augusta, ME 04333-0046 Telephone: (207) 512-3100 Toll free: 800-451-9800 TTY: (207) 512-3102 www.mainepers.org

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