Delaware Public Employees Retirement System State Employees Pension Plan Ready for Retirement Presen

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Delaware Public Employees
Retirement System State Employees Pension
Plan Ready for
Retirement Presented by the State
of Delaware Office of Pensions
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Overview

• Preparation for Retirement
• Pensioner Benefits
• Other Retirement Issues
• Calculation of Creditable Service
• and Buy-In Options
• Estimated Pension Benefit Calculation
• Questions and Answers

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Preparation for Retirement
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Unreduced Service Pension Benefit

• 30 years of credited service at any age
• Age 60 with at least 15 years of credited
  service
  
• Age 62 with at least 5 years of credited service

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Reduced Service Pension Benefit

• Age 55 with at least 15 years of credited
  service
  
• Reduced by 0.2 for each month the employee is
  under age 60
  
• 25 years of credited service at any age under age
  60
  
• Reduced by 0.2 for each month the employee is
  short of 30 years of credited service

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Vested Pension Benefit

• Employee must have 5 consecutive years of pension
  creditable service to be eligible
  
• Effective the first month following the
  employees 62nd birthday

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Retirement Process

• Notify supervisor/HR three months prior to
  retirement date
  
• HR will contact employee for an appointment date
  and time to complete pension packet
  
• Personal documents needed for HR Office
• Birth document of employee and spouse
• Social Security Card of employee and spouse
• Marriage document, death certificate, or divorce
  decree as applicable
  
• Medicare card showing A and B Coverage for
  employee and spouse if applicable

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Beneficiary versus Survivor

• A beneficiary named on the back of the Employee
  Actuarial Form or Designation of Beneficiary Form
  (as found in your Comprehensive Annual Statement)
  receives a lump sum distribution of employee-paid
  pension contributions, plus interest, in the
  event that there is no eligible survivor at the
  time of the employees death.
• A survivor is a person eligible to receive a
  monthly pension benefit at the time of the
  employee or pensioners death.

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Who can be an Eligible Survivor?

• Husband or wife
• Child/children under age 18, unmarried, and if
  between the ages of 18 and 22, a full-time
  student
  
• Child permanently disabled prior to age 18
• Dependent parents

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Pensioner Benefits
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Survivor Benefits

• Payable to an eligible survivor
• One-time irrevocable election made upon
  retirement
  
• 50 No reduction in pensioners benefit.
  Eligible survivor receives 50 of benefit at the
  time of pensioners death.
  
• 75 3 reduction in pensioners benefit for
  their lifetime. Eligible survivor receives 75
  of benefit at the time of pensioners death
  
• Option must be made regardless of survivor status
  upon retirement
  
• If the 75 option is elected and the eligible
  survivor predeceases the pensioner, the 3
  deduction from the pensioners benefit continues

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Burial Benefit

• 7,000 benefit at no cost to the pensioner
• May list one or more individuals as a
  beneficiary
  
• Amount divided equally among beneficiaries if
  more than one listed
  
• Can designate primary and contingent
• Can change beneficiary by completing a Change of
  Beneficiary Form and submitting to the Pension
  Office
  
• Payment may be taxable to beneficiary

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Health Insurance

• Health benefits are available with the State
  share paid by the State of Delaware for
  employees
  
• Hired prior to 7/1/1991
• Disability Pensioners
• Employees on Long Term Disability benefits paid
  by the Hartford
  
• For employees hired on or after 7/1/1991, the
  following portion of the State share will be
  paid by the State of Delaware
  
• Less than 10 years of credited service 0
• 10 years 14 years 11 months 50
  
  
• 15 years 19 years 11 months
  75
  
• At least 20 years
  100
  
• Employees are responsible for paying the employee
  share of health care

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Health Insurance

• All plans coupled with prescription plan
  coverage
  
• Current provider is Medco
• Benefits as a retiree are the same as those
  extended to active employees
  
• Changes in coverage can be made once a year
  during the open enrollment period in May
  effective July 1
  
• Life changing events allow a change in coverage
  throughout the year (e.x. marriage, birth,
  retirement, etc.)
  
• Automatic payroll deduction

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Changes in Health Coverage at Age 65

• Medicare Parts A and B becomes primary insurance
  through Social Security
  
• Part A is free to most employees
• Part B has a monthly premium and will be deducted
  from the employees Social Security benefit
  
• Parts A and B cover approximately 80 of the
  employees total health care costs
  
• Pension Office provides a Medicare Supplement
• Helps to cover the additional 20 of health care
  costs
  
• State share will be paid by the State of Delaware
  as applicable based on employees date of hire
  and years of creditable service
  
• Select supplement with or without prescription
  coverage
  

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Medicare Part D

• Effective 1/1/2006 for retirees and dependents
  over age 65
  
• Required coverage through Social Security if you
  do not have a comparable prescription coverage
  
• Coverage through the State of Delaware is, on
  average, at least as good as the Part D program
  
• No action is required to continue coverage
  through the State of Delaware
  
• Certificate of creditable coverage from the State
  of Delaware proves the employee has comparable
  prescription coverage
  
• Employee cannot enroll in Medicare Part D and
  continue prescription coverage through the State
  of Delaware
  

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Dental Insurance

• Same dental plans available to retirees and
  active employees
  
• School District employees may be offered a
  different dental plan when actively employed
  
• Costs will differ
• Can stay with school dental plan for a total of
  18 months under COBRA provisions
  
• Pensioner is responsible for the entire cost of
  dental coverage
  
• Automatic payroll deduction

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Supplemental Benefits

• 1) Liberty Mutual Auto and Home Insurance
• 2) John Hancock Long Term Care Insurance
• 3) ARAG Legal Expense Insurance
• 4) VSP Vision Insurance
• 5) PetCare Pet Insurance
• Automatic payroll deductions
• Available to all pensioners
• Must call the company directly upon retirement to
  enroll or continue benefits

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Blood Bank

• No charge to pensioner
• Covers pensioner and any eligible dependents
• When contacted by the Blood bank
• Pensioner can donate blood
• Have someone donate blood for them
• Pay for a pint of blood
• At age 75, there is no longer a blood donation or
  payment obligation and pensioner is a life-long
  member
  

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Minnesota Life Insurance

• Became available 1/1/2003 for active employees
  who wanted to maintain Group Universal Life
  Insurance after retirement
  
• Employee must enroll in the plan prior to
  retirement
  
• Minnesota Life will contact employee directly
• Premiums must be paid directly to Minnesota Life
  or arrange for automatic deduction from a
  checking or savings account. We cannot deduct
  the premium from the pension benefit.
• Effective 7/1/2009, the face value of Group
  Universal Life Insurance reduces by 50 upon
  retirement
  
• Premiums reduce accordingly

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Other Retirement Issues
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Direct Deposit

• Mandatory for pensions effective January 1, 1996
  and after
  
• Verification is required for any account number
  that funds will be deposited into
  
• Voided check, savings statement, letter from the
  bank, etc.
  
• Monthly pension benefit deposited into specified
  account(s) on the last business day of each
  month
  
• Advice mailed to employees home address

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Credit Union Deduction

• Deduction will be made and sent to the designated
  Credit Union
  
• The employee must contact the Credit Union to
  specify which account (s) will be utilized
  
• e.x. checking, savings, club account, loan, etc.

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Lag Payroll

• All State agencies school districts, with the
  exception of the University of Delaware, are on
  lag payroll
  
• Pension benefits are deposited at the end of the
  next month following the effective date of
  pension
  
• The first deposit will include two months of
  pension benefits
  
• Each deposit thereafter will include only one
  month of pension benefit

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Taxes

• Pension benefit is taxable by the Federal
  Government and may be taxable in the state where
  the employee resides
  
• Only State of Delaware taxes can be withheld from
  the pension benefit
  
• Form 1099-R mailed at the end of the year and
  will state total amount of pension paid during
  the year and portion that is taxable
  
• Tax withholding election form mailed to
  pensioners at that time but withholding changes
  can be made throughout the year
  
• Pension contributions paid through 12/31/1992 are
  post-tax and 1/1/93 through retirement date are
  pre-tax

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Work Restrictions

• If receiving a pension benefit and returning to
  work for the State of Delaware, the pensioner
  must hold a non-pension covered position
  
• An elected official or position appointed by the
  Governor and confirmed by the Senate allowed
  
• No work restrictions if not working for the State
  of Delaware
  
• No earnings limits
• The HR office of employing agency can confirm
  whether a position is pension creditable
  
• If receiving a Social Security benefit, earnings
  limits apply
  
• Contact local Social Security office for current
  regulations if receiving a benefit

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Post Retirement Increases

• PRI is a pension increase received after
  retirement
  
• Pension law does not provide for automatic
  increases
  
• Increases granted upon Legislative approval
• Typically an employee must be retired an entire
  fiscal year to be eligible for a retirement
  increase

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Social Security Disability Benefits

• Employee must typically earn 20 quarters of
  credits in the 10 years prior to being disabled
  to qualify for disability benefits
  
• Earning 4 quarters of credit each year until age
  57 should maintain eligibility
  
• Contact local Social Security office for
  additional information or to apply for benefits

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Calculation of Creditable Service and Buy-in
Options
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State Employment

• May have continuous employment with no break
• May have breaks in service that affect the
  calculation of pension creditable time
  
• Termination of employment
• Withdrawal of pension contributions may have been
  received
  
• If so, contributions may have been repaid
• If not repaid, contributions can be repaid now to
  restore pension credit
  
• Workers Compensation
• Interrupting military
• Adjusted service date may not be the employees
  date of hire into a pension creditable position
  

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Free Military Service

• Free military service can be granted if an
  employee meets the following criteria
  
• The employee was hired prior to 7/1/1976
• The employee came into State service within five
  years of full-time active duty
  
• The employee was enrolled in professional or
  vocational training within 5 years after release
  from full-time active duty and came to work
  within five years of the completion of training.
  Employee must submit copies of transcripts
• A copy of Form DD214 is submitted to the Pension
  Office

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Buy-In Options upon Retirement

• Approved medical or personal leaves of absence
• Actuarial
• Military Service if hired on or after 7/1/1976
• Other Governmental employment
• CETA
• Teaching experience in another state if hired on
  or after 7/1/1976
  
• Other Professional Educational Experience (OPEE)
• Employee must have been hired with the State of
  Delaware prior to 7/1/1976
  
• Must have had full-time other professional
  educational employment for another state or
  private institution and subsequently became an
  employee as a school teacher, professional
  administrative employee or school nurse

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Buy-In Options Continued

• Sick Leave
• Buy-in of service credit using unpaid accrued
  sick leave
  
• Employee typically compensated by agency/school
  district for up to 90 days at half their daily
  rate
  
• One month of credit can be purchased for each 21
  days accrued beyond the balance of paid days, not
  to exceed 12 months
  
• Only whole months may be purchased
• Higher Education Sabbatical Leaves
• Some buy-in options must be approved and/or
  verified by the Pension Office prior to
  retirement.
  

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Payment for Buy-In Options

• Payment for the purchase of an approved buy-in is
  calculated at the time of the employees
  retirement
  
• Buy-in must be paid prior to the issuance of the
  first pension benefit
  
• Can be purchased one of three ways
• Deducted from the first pension benefit, if large
  enough to cover the cost
  
• Personal check
• Rollover from a tax-sheltered account

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Deferred Compensation

• Employees may elect to defer payment of sick
  leave, annual leave, lag payroll, or contract
  payoff into the Deferred Compensation Plan or any
  qualified tax-shelter program
• Form to defer money will be completed with
  employees HR office
  
• Must be completed at least one month in advance
• Contributions to the Plan will cease upon
  retirement
  
• Limits apply to the amount of money contributed
  to the Plan each year
  
• Participants can access the money in their
  Fidelity account as soon as 2 weeks following
  their last salary paycheck from the State
  
• Participants can make rollovers from the States
  plan into an IRA or new employers plan once
  separated from State service
  
• Contact Fidelity or individual tax-shelter for
  payment arrangements
  

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Estimated Pension Benefit Calculation
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Disclaimer

• THE STATEMENT YOU WILL RECEIVE REPRESENTS
  ONLY AN ESTIMATE OF CREDITED SERVICE AND
  POTENTIAL BENEFITS. NONE OF THE INFORMATION IN
  THIS ESTIMATE HAS BEEN VERIFIED AND THE OFFICE OF
  PENSIONS OF THE STATE OF DELAWARE MAKES NO
  REPRESENTATION OR WARRANTY, EXPRESSED OR IMPLIED,
  AS TO THE ACCURACY OR COMPLETENESS OF SUCH
  INFORMATION. ACTUAL SERVICE CREDIT AND BENEFITS
  WILL BE VERIFIED AT THE TIME OF RETIREMENT.

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Questions