Public Employees Retirement System PERS Retirement Seminar

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Public Employees Retirement System (PERS)
Retirement Seminar

• Sponsored by
• University Human Resources
• 732-932-3020, ext. 4077

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PERS Retirement Seminar Outline

• Steps to retirement
• Types of PERS retirement
• Retirement calculation examples
• Retirement payment options
• Cost of living adjustments (COLA)
• Health benefits at retirement
• Group life insurance
• Determining last working day (staff only)
• Sick leave payout (staff only)
• Employment after retirement
• Rutgers retiree associations
• Useful phone numbers and websites

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Steps to Retirement

• 6-8 months before retirement
• Send Request for Retirement Estimate to the State
• Review your retirement payment options
• 4-6 months before retirement
• Notify your department
• Determine last working day (staff employees)
• Contact Social Security office (if you plan to
  apply)
• Mail Application for Retirement Allowance to
  State
• Mail copy of Application to University Human
  Resources (57 US Highway 1, New Brunswick, NJ
  08901)

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Steps to Retirement (continued)

• 3 months before retirement
• If you or spouse or civil union/same-sex domestic
  partner is 65, enroll in Medicare A B
• 2 months before retirement
• Receive Quotation of Retirement Benefits from
  state
• 1 month before retirement
• Receive retirement approval letter from state
• Life insurance conversion (if
  interested)

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Steps to Retirement (continued)

• Shortly before retirement
• Enroll in Retired Group State Health Benefits
• Enroll in Retiree Dental Expense Plan
• Shortly after retirement
• COBRA letter from University Human Resources
• Tax withholding forms (W4P NJW4P ) from State
• Authorization for Direct Deposit of Benefit
  Payment from state
• First retirement benefit payment dated no
  earlier than first of month following retirement
• Sick leave payout (staff employees)

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Types of Retirement

• Deferred retirement
• Under age 60
• 10 years pension-credited service
• Benefits effective month after attaining age 60
• Ordinary disability retirement
• 10 years pension-credited service
• Totally and permanently incapacitated
• from further employment in members
• job title
• Accidental disability
• Totally and permanently incapacitated
• as direct result of on-the-job traumatic
  event

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Types of Retirement (continued)

• Early retirement
• 25 years pension-credited service
• Benefit is reduced if member is under
• 55 at retirement
• Service retirement
• Age 60
• No minimum years of service required
• Veteran
• Honorable discharge from U.S. military service
• Submit copy of DD214 or discharge papers to State

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Service Retirement Formula

• Years of Service Final Average
• 55 X Salary
• Average of three highest years of base salary

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Service Retirement Calculation

• Member age 61
• Final Average Salary 40,000
• Years of Service 22 years
• Retirement Option Maximum
• 22/55 .40 x 40,000 16,000 annually
• or 1,333.33 per month

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Early Retirement Details

• Members enrolled prior to July 1, 2007
• Age reduction ¼ of 1 per month prior to age 55
• Members enrolled after July 1, 2007
• Age reduction 1/12 of 1 per month the member
  is under age 60 through age 55
• AND
• Age reduction 1/4 of 1 per month the member is
  under age 55

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Early Retirement Formula

• Based on Service Retirement formula
• Years of Service Final Average
• 55 X Salary
• However, member who retires before age 55
• receives permanent reduction of ¼ of 1
• for each month under age 55 (3 per year)
• Assumes that member enrolled in PERS prior to
  July 1, 2007

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Early Retirement Calculation

• Member age 53
• Final Average Salary 40,000
• Years of Service 25
• Retirement Option Maximum
• Enrollment Date July 1, 1982
• 25/55 .4545 X 40,000 18,181.82
• X.94 reduction 17,090.91 annually
• 1,424.24 monthly
• 1.0 - .0025 x 24 (months under 55) 1.0 - .06
  .94

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Veteran Retirement Formulas

• Eligibility requirements
• 60 years of age and
• 20 years service
• 55 years of age and
• 25 years of service
• 55 years of age and
• 35 years of service

• Benefit Calculation
• 54.5 of highest 12
• months base salary
• 54.5 of highest 12
• months base salary
• Years of service divided by
• 55 times highest 12
• months base salary

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Veteran Retirement Calculation

• Member age 60
• Final Average Salary 40,000
• Years of Service 20 years
• Retirement Option Maximum
• 40,000 x 54.5 21,800 annually
• or 1,816.16 per month

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Retirement Payment Options

• Benefits will continue for the duration of your
  lifetime regardless of payment option selected
• Become familiar with all payment options
• Choose one out of nine available payment options
• Consider your
• Financial needs
• Your age and health
• Your beneficiarys age and health
• Need to provide survivor benefits
• Once first retirement check is issued, you cannot
  change your payment option

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Retirement Payment Options

• Maximum Allowance
• Option A
• Option B
• Option C
• Option D
• Option 1
• Option 2
• Option 3
• Option 4

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Maximum Allowance

• Sometimes called single-life annuity
• Highest amount payable
• Maximum benefit stops at your death
• No pension benefits are payable to
• your survivors
• If you die before receiving through your
  retirement allowance, the amount you paid into
  the retirement system while actively working, the
  balance of your contributions plus interest will
  be paid to your beneficiary

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Alternatives to the Maximum Allowance

• All other options may provide a benefit to your
  beneficiary after you die
• By taking an option, you reduce your own monthly
  retirement allowance

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Pop-up Options

• Options A,B,C and D
• Upon your death your beneficiary will receive a
  lifetime monthly pension
• If your beneficiary predeceases you, your
  retirement allowance will pop-up to the Maximum
  Allowance
• The percentage of reduction is based on
• Life expectancies of you and your beneficiary
• The option you select (A,B,C or D)
• Younger beneficiary greater benefit reduction
• Beneficiary must be an individual
• Beneficiary can never change after retirement

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Pop-up Options (continued)

• 100 to beneficiary or increases to maximum
  allowance
• 75 to beneficiary or increases to maximum
  allowance
• 50 to beneficiary or increases to maximum
  allowance
• 25 to beneficiary or increases to maximum
  allowance

• Option A
• Option B
• Option C
• Option D

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Option 1

• Provides lifetime monthly payment to you
• May provide lump-sum payment for your beneficiary
  after your death
• At retirement, amount the state expects to pay in
  lifetime benefits is set aside as a retirement
  reserve
• Reserve is reduced each month by your monthly
  allowance
• Reserve balance if any remaining at your death
  will be paid to your beneficiary
• If reserve has been exhausted at your death, no
  benefits will be paid to your beneficiary
• You may name more than one beneficiary for this
  option
• Beneficiary can be changed at any time
• Beneficiary can be a person, charity, institution
  or your estate

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Option 1 Example

• Monthly benefit 2,000
• Retirement reserve 230,400
• Retiree dies at 16 months
• Retiree collected 32,000
• Beneficiary benefit 198,400
• Since reserve is based on your retirement
  allowance and your life expectancy, your own
  reserve may be much different than this example

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Option 2

• Sometimes called 100 joint and survivor annuity
• Retirement benefit calculation based on your age
  and and age of your beneficiary
• If your beneficiary is living at time of your
  death, beneficiary will receive 100 of your
  monthly retirement allowance for his or her life
• If your beneficiary predeceases you, your benefit
  does not increase
• Retirement benefit calculation is based on your
  age and the age of your beneficiary
• Beneficiary must be an individual
• Beneficiary can never change after retirement

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Option 3

• Sometimes called 50 joint and survivor annuity
• Retirement benefit calculation based on your age
  and and age of your beneficiary
• If your beneficiary is living at time of your
  death, beneficiary will receive 50 of your
  monthly retirement allowance for his or her life
• If your beneficiary predeceases you, your benefit
  does not increase
• Retirement benefit calculation is based on your
  age and the age of your beneficiary
• Beneficiary must be an individual
• Beneficiary can never change after retirement

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Option 4

• If the preceding payment options do not meet your
  needs, you may want to consider this option
• If your beneficiary is living at the time of your
  death, your beneficiary will receive an amount
  designated by you for his or her life
• If your beneficiary predeceases you, your benefit
  does not increase
• Beneficiary allowance cannot be more than your
  own allowance
• You can name one or more beneficiaries
• Beneficiary can never change after retirement

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Example of PERS Retirement Payment Options

• Employee age 55 Beneficiary age 58
• Years of Service 30 Final Ave. Salary
  68,000
• Maximum Allowance 3,090.91 (monthly)
• Option Member Benefit Beneficiary
  Benefit
• A 2,764.78 2,764.78
• B 2,888.35 2,166.26
• C 3,027.36 1,513.68
• D 3,061.34 765.33
• 1 3,067.53 374,404.98
• 2 2,795.68 2,795.68
• 3 3,042.81 1,521.41
• 4 3,073.93 500.00

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Cost of Living Adjustments (COLA)

• The Pension Adjustment Program provides
  cost-of-living adjustments to retirees and
  survivors who are receiving monthly retirement
  allowances
• The first adjustment is available to all
• retirees and eligible survivors on the
• 25th month after the members retirement
• Subsequent adjustments are computed
• annually and are reflected each year in
• the February 1st check
• (payment for January)

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Health Benefits at Retirement

• Active medical, prescription drug and dental
  coverage continues to end of retirement month
• Retiree medical benefits begin the first day of
  the month following retirement (enrollment
  required)
• Example January 1 retirement
• Active employee benefits end January 31
• Retired Group State Health Benefits begin
• February 1
• Retiree Dental Expense Plan begins
• February 1
• Note all retiree medical plans
• include prescription drug coverage

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Employees Who Attained 25 Years of
Pension-credited Service Prior to July 1, 1997

• No contributions required for Retired Group State
  Health Benefits
• Health benefits include medical and prescription
  drug coverage
• Full reimbursement for cost
• of Medicare Part B premiums
• (per individual) provided by the state

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Employees Who Attained 25 Years of
Pension-credited Service Between July 1, 1997 and
June 30, 2007

• Contributions required for Retired Group State
  Health Benefits for NJ DIRECT 10 only (NJ DIRECT
  15 and HMOs are free)
• Premium sharing according to terms specified in
  agreement in effect at the time employee attained
  25 years of pension-credited service
• Rates for retirees who share the cost of their
  coverage with the State (in folder and on states
  website)
• http//www.state.nj.us/treasury/pensions/hb_open_
  enrollment_apr2008/state_retired_share.htm
• 46.10 - partial reimbursement of Medicare Part B
  premiums (per individual)

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Employees Who Attained 25 Years of
Pension-credited Service On or After July 1, 2007

• Health contribution of 1.5 of the retirement
  benefit
• Waived if enrolled in the SHBP Retiree Wellness
  Plan
• Agree to and submit Pledge for Healthier Living
• Complete a Health Risk Assessment annually
• Have a medical check-up annually
• Have appropriate tests and screenings when
  recommended
• Participate in health plans disease management
  program when recommended.

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Employees Who Retire with Less than25 Years of
Pension-credited Service

• Option to enroll in Retired Group State
• Health Benefits and pay full group rate
• Do not qualify for reimbursement of
• Medicare Part B premiums
• Rates for retirees who pay
• the full cost for their coverage
• (in folder and on states website)
  http//www.state.nj.us/treasury/pensions/hb_open_e
  nrollment_apr2008/retired_state_full.htm

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Surviving Spouses or Civil Union/Same-Sex
Domestic Partners of Retirees with 25 Years of
Pension-Credited Service

• Surviving spouse or civil union/same-sex domestic
  partner may continue retiree health
• Will be required to pay full group rate
• Do not qualify for reimbursement of Medicare Part
  B premiums

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Enrolling in Retired Group State Health Benefits

• Enrollment packet mailed from state to home
  address
• State Health Benefits Retired Status Application
• Available at http//uhr.rutgers.edu/GetAForm.htm
  
• If packet is not received month prior to
  retirement call the State Retiree Benefits Office
  at 609-984-1683
• Complete and return Application to the Division
  of Pensions and Benefits
• Proof of enrollment in Medicare required for
  retiree and/or dependent 65 or older

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Retiree Dental Expense Plan

• Dental plan designed for retirees
• Administered by Aetna Dental
• Retirees pay full cost
• Continues as long as
  premiums are paid
• More information available at
• http//www.state.nj.us/treasury/pensions/shbp.htm
  6

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Health Benefit Coverage Changes

• Coverage may be changed once during a 12-month
  period
• Coverage changes after a qualifying event
• Special enrollment
• Rate changes
• New offerings
• Coverage questions, call the State Retiree
  Benefits Office at 609-984-1683

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Continuation of Non-core Benefits through COBRA

• COBRA packet mailed from Human Resources to home
  address
• Dental coverage may be continued through COBRA
  for 18 months
• Active employee (Caremark) prescription drug
  coverage may be continued through COBRA for 18
  months
• Vision coverage may also be continued though
  COBRA for 18 months
• COBRA rates available at
• http//uhr.rutgers.edu/documents/cobraratesapril2
  008.pdf

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Retiree Group Life Insurance

• Qualification retire with 10 or more years of
  pension credited-credited service
• Amount of life insurance three-sixteenths (3/16)
  times last 12 months salary

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Conversion of Life Insurance

• One time option to convert to individual private
  policy through Prudential
• Must be done no later than 31 days after
  retirement date
• Cannot be denied for health reasons
• May want to contact other carriers for comparable
  life insurance rates
• To convert, contact the Prudential Group Life
  Conversion department at 1-877-889-2070
• You can also use the online Prudential Life
  Insurance Calculator at http//www.state.nj.us/tr
  easury/pensions/conversion-calc.htm
• Contributory life group policy number is G-14800
• Noncontributory life group number is G-139000

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Conversion of Life Insurance Example

• Base Salary 12 months prior to retirement
  30,000
• Total death benefits as an active member
  90,000 (3 x 30,000)
• Life insurance benefit after retirement 5,625
  (3/16 x 30,000)
• Amount eligible to convert 84,375 (90,000 -
  5,625)

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Determining Last Working Day(Staff Employees
Only)

• Unused vacation, accrued vacation, AL days and PH
  days are to be taken prior to retirement
• Plan ahead since last day in office may be
  several weeks or months before actual retirement
  date
• Employee and department should come to an
  agreement regarding last day of work

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Last Day of Work Calculation Example

• Janes retirement date June 1
• Jane earns 20 vacation days per year
• Days remaining
• Number of vacation days remaining 10
• Number of AL days remaining 1
• Number of PH days remaining 2
• Number of vacation days accrued (July May)
  18
• University holiday (Memorial Day) 1
• Total days to be used prior to retirement 32
• Count backwards 32 days from June 1
• Janes last work day April 15

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Sick Leave Payout (Staff Employees)

• Eligible staff employees receive one half the
  balance of their sick days up to 15,000
• All applicable taxes will be deducted
• Allow 6 to 10 weeks processing time
• Sick Leave Payout at Retirement
• Deferral form can be used to defer
• sick leave payout
• Form available from Human Resources
• http//uhr.rutgers.edu/GetAForm.htm

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Compassionate Leave Program (Staff Employees)

• Donated-leave bank program for qualifying
  managerial, professional, supervisory, and
  confidential employees, as well as members of the
  URA-AFT and AFSCME Local 888, who experience
  catastrophic health conditions and will exhaust
  all of their paid time off
• Eligible employees can donate up to 50 vacation
  and/or sick leave days to the leave bank
• To donate, complete and submit Donation to Bank
  form available at http//uhr.rutgers.edu/document
  s/CompassionateLeaveDonate.doc

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Employment After Retirement

• Working for private industry, the federal
  government or a state other than New Jersey will
  not affect your PERS retirement benefits
• If you return to work for the State of New Jersey
  in an ABP eligible position you can work but
  you cannot join the pension system
• If you return to work in a PERS eligible position
  including type-4 hourly positions and earn more
  than 15,000 per year, and you will forced to
  re-enroll in PERS (pension benefits will stop)
• Rule does not apply to PERS retiree employed by
  an institution of higher education in a teaching
  position covered by PERS

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Retired Faculty Association (RFA)

• Serves needs and interests of retired faculty
• Sponsors workshops and other events
• Members receive RFA Bulletin
• Join by completing membership application
• -Annual membership dues 10.00
• For more information visit the RFA website
• http//scils.rutgers.edu/rfa/rfawebform.html

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Silver Knights Rutgers Staff Retirees Association

• Serves needs and interests of retired staff
• Sponsors workshops, trips, luncheons
• Members receive Silver Knights Herald
  newsletter
• Join by completing membership application
• Annual membership dues 10.00
• For more information, visit the
• Silver Knights website
• http//scils.rutgers.edu/silverknights/

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State-authorized Carriers(for ACTS Participants)

• AIG-VALIC 800-448-2542
• AXA Equitable 866-786-0856
• The Hartford 800-243-7782, ext. 54400
• ING Financial 877-873-0321
• MetLife 800-545-0108
• TIAA-CREF 866-842-8412

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Telephone Contacts

• Division of Pensions and Benefits
• Retiree Benefits 609-984-1683
• Client Services 609-292-7524
• Deferred Compensation 1-866-657-3327
• University Human Resources 732-932-3020 ext 4077
  
• Social Security 800-772-1213
• Internal Revenue Service 800-829-1040
• NJ Division of Taxation 800-323-4400

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Useful Websites

• University Human Resources
• http//uhr.rutgers.edu/
• Internal Revenue Service (IRS)
• http//www.irs.gov/
• Medicare
• http//www.medicare.gov/
• Social Security Online
• http//www.ssa.gov/
• NJ Department of Banking and Insurance
• http//www.state.nj.us/dobi/index.shtml
• NJ Department of Health and Senior Services
• http//www.state.nj.us/health/
• NJ Division of Pensions and Benefits
• http//www.state.nj.us/treasury/pensions/