An Overview of MainePERS for Maine Association of Police

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

• 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

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Maine Public Employees Retirement System

• 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
  employees 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

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MainePERS Terms

• Creditable Service
• A factor in the calculation of service retirement
  benefit
• Service Rendered
• Additional Service Granted
• Service Purchased

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MainePERS Terms (continued)

• 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)

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MainePERS Terms (continued)

• 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

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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 at
  www.mainepers.org or by calling the Disability
  Unit.
•  

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Pre-Retirement Death Benefits

• 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)

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Pre-Retirement Death Benefits (continued)

• 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

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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

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Additional Service Credits
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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

• 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

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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.

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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
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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 members final
  termination from MainePERS- covered employment

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

• 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

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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 7
9.6 50 77.9 49 76.3 48 74.8 47
73.3 46 71.9 45 70.6 44 69.4 4
3 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.
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Special Service Retirement Plans

• 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.

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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

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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

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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

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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

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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 12) 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 _at_ 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.
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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.
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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?

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Retirement Process

• 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

(Applications are accepted up to 12 months prior
to your retirement date but should be filed at
least 30 days before.)
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Benefit Payment Options

• 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

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What is MaineSTART?
MainePERS 457 Deferred Compensation Program

• Low cost investment options
• Easy investment selection
• MainePERS Board of Trustees oversight
• Coordinated retirement savings

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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 [phone] Toll free
800-451-9800 TTY [phone]
www.mainepers.org