PERS and TRS The Retirement Process

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PERS and TRSThe Retirement Process

• Division of Retirement and Benefits

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Planning for Retirement

• Determine your needs
• Learn what options are available
• Determine the tax consequences of various options
• Explore techniques to turn your investments into
  income
• Review wills, beneficiary designations, long term
  care policies, etc.

3
Determine Your Financial Needs

• Shift from primarily saving and investing to
  ensuring that your money lasts
• Most people live 20 years or more in retirement
• Costs are rising

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PERS Four-Tiered System

• Tier I First enrolled in PERS prior to July 1,
  1986
• Tier II First enrolled in PERS on or after July
  1, 1986 through June 30, 1996
• Tier III First enrolled in PERS on or after
  July 1, 1996 through June 30, 2006
• Tier IV First enrolled in PERS on or after July
  1, 2006 (DCR Plan)

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TRS Three-Tiered System

• Tier I First enrolled in TRS prior to July 1,
  1990
• Tier II First enrolled in TRS on or after July
  1, 1990 through June 30, 2006
• Tier III First enrolled in TRS on or after July
  1, 2006 (DCR Plan)

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PERS Reaching Retirement Eligibility

• Tier I Earlyage 50 Normalage 55 (must be
  vested)
• Tiers II, III Earlyage 55 Normalage 60
  (must be vested)
• All tiers can retire at any age with
• 20 years of paid peace officer/fire membership
  service, or
• 30 years of paid membership service forall other
  employees.

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TRS Vesting Requirements

• Eight paid-up years of membership service or
• Five paid-up years of membership service and
  three paid-up years of Alaska BIA service or
• 12 paid-up years of part-time or a combination of
  part-time and full-time TRS membership service.
• (If you entered TRS prior to July 1, 1975,
  contact your representative for more information.)

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TRS Reaching Retirement Eligibility

• Tier I Earlyage 50 Normalage 55 (must be
  vested)
• Tier II Earlyage 55 Normalage 60 (must be
  vested)
• Tier I and II
• can retire at any age with 20 years of paid TRS
  membership service.

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TRS Retirement Service Eligibility

• Can retire at any age and receive a normal
  benefit if you have
• 20 paid-up years of TRS service or
• 20 paid-up years of combined TRS service and
  Alaska BIA service, if last five are TRS years
  or
• 20 paid-up years of combined full-time
  andpart-time service (at least 172 days worked)
  or
• 25 paid-up years of credited service if last five
  are TRS years.
• Unless otherwise noted, TRS years are membership
  service years.

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TRS How Service is Credited

• Based on number of contract days worked during
  school year
• Part-time teachers
• must work at least 50 of the normal workweek on
  a regular basis
• Service is credited in proportion to full-time
  credit

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TRS Membership Service Chart

• 0-8 days no credit
• 9 to 26 days .1
• 27 to 44 days .2
• 45 to 62 days .3
• 63 to 80 days .4
• 81 to 99 days .5
• 100 to 117 days .6
• 118 to 135 days .7
• 136 to 153 days .8
• 154 to 171 days .9
• 172 days or more 1.0

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PERS Average Monthly Salary (AMS)

• Peace Officers and Firefighters
• Based on 3 highest consecutive salaries for all
  tiers
• All others
• Tiers I and II
• Based on 3 highest consecutive salaries
• Tier III
• Based on 5 highest consecutive salaries

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PERS Average Monthly Salary (AMS)

• Tiers I and II

• Payroll Year Salary Months
• 2001 36,000 12
• 2002 33,000 11
• 2003 18,000 6
• 87,000 29
• 87,000 29 3,000 (AMS)
• Must work 115 days of credited service in last
  year to include as one of three/five highest
  consecutive years.
• Tiers II and III Geographical Differential must
  have been received for 50 or more of PERS
  service earned through employment to be used in
  calculation of benefit.

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PERS Benefit Formula

• Peace Officers and Firefighters
• 2 x first 10 years x AMS
• 2.5 for all years after 10 x AMS
• All others
• 2 x first 10 years and all years prior to 1986
  x AMS
• 2.25 for next 10 years x AMS
• 2.5 for all years after 20 years x AMS

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PERS Benefit Formula

• Example All Others

• Member A has 3,000 AMS and 21 years of service.
• (2 x 3,000) x 10 600
• (2.25 x 3,000) x 10 675
• (2.5 x 3,000) x 1 75
• Total base retirement benefit 1,350/mo
• If you are eligible for early retirement, or
  choose a joint and survivor option, this normal
  benefit amount is reduced.

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PERS Benefit Formula

• Example Peace Officer / Firefighter

• Member B has 3,000 AMS and 25 years of service.
• (2 X 3,000) x 10 600
• (2.5 X 3,000) x 15 1,125
• Total base retirement benefit 1,725/mo
• If you are eligible for early retirement, or
  choose a joint and survivor option, this normal
  benefit amount is reduced.

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TRS Average Base Salary (ABS)

• ABS is determined by
• adding together your three highest annual, base
  contract salaries, and
• dividing total by three.
• To include a base salary as one of three highest,
• you must work and receive compensation during at
  least 2/3 of the school year.

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TRS Applying the Formula

• Example 22 years of service, assuming ABS is
  60,000
• 2 x 60,000 x 20 years 24,000 plus
• 2.5 x 60,000 x 2 years 3,000
• 27,000 divided by 12 2,250 monthly
• Please note If you are eligible for early
  retirement, choose joint and survivor options, or
  have an indebtedness owing at retirement, normal
  benefit amount is reduced. Reduction is for the
  lifetime of the benefit.

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TRS Early Retirement Reduction

• Example 19 years of service
• Age is 55 years, 5 months
• Tier II ABS 60,000
• 2 x 60,000 x 19 years 22,800
• Multiply early age factor x .623501
• 14,215.82 / 12
• Monthly benefit 1,184.65

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PERS Increasing Service Credit

• Claiming eligible service can potentially
  increase your benefit.
• Active military service
• Temporary service with PERS employer
• Workers Compensation leave without pay

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TRS Increasing Service Credit

• Claiming Outside teaching service or active
  military service
• Claiming unused sick leave
• Claim at retirement
• Contributions not required
• Credited according to current Membership Service
  Chart
• Added to your TRS service and increases your
  retirement benefit after retirement
• Cannot be used as eligibility credit

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Indebtedness Payment Options

• Pay indebtedness in full prior to retirement date
• Pay with pre-tax transfer from a qualified plan
• Pay by pre-tax or post tax payroll deductions
• Pay with post-tax dollars
• Take a lifetime actuarial reduction to retirement
  benefit

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PERS Pension Decisions

• Retirement Pension Options

• Regular Retirement
• Level Income Options (N/A Tier III)
• 50 or 75 Joint and Survivor
• 66 2/3 Last Survivor Option (N/A Tier III)

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PERS Pension Decisions

• Regular Retirement
• All benefits cease at your death, including
  health insurance
• Beneficiary receives balance of contribution
  account, if any, and last pension check

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PERS Pension Decisions

• Level Income Option (N/A Tier III)
• Increased benefit amount prior to age 65
  benefit decreases at age 65
• All benefits cease at your death, including
  health insurance
• Beneficiary receives balance of contribution
  account, if any, and last pension check

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PERS Survivor Options

• Election of a survivor option
• Reduces regular retirement benefit
• Reduction based on age of member and members
  spouse or qualified same-sex partner at time of
  retirement
• Health insurance eligibility
• Continues for spouse or same-sex partner only if
  a survivor option is chosen

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PERS Survivor Options

• 75 or 50 Joint Survivor
• If survivor dies, no change to members benefit
• 66-2/3 Last Survivor
• Remaining survivor receives 66-2/3 benefit
• If survivor dies, members benefit reduces

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PERS Survivor Options

• Benefit Type Retiree Survivor
• Normal Benefit 1,350.00 0.00
• 75 J S 1,185.00 888.75
• 50 J S 1,235.00 617.50
• 66-2/3 LS 1,240.00 826.50
• Member is age 60 and spouse is age 55.
• If retiring early, benefit is reduced.
• Please note Vested members who have terminated
  PERS employment and reach normal retirement age
  will not receive larger monthly benefits by
  waiting until they are older to retire.

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TRS Pension Decisions

• Retirement Pension Options

• Regular Retirement
• 1 Supplemental
• 50 or 75 Joint and Survivor (JS)
• 66-2/3 Last Survivor (LS)

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TRS Regular Retirement Option

• No reduction to benefit except for early
  retirement or indebtedness, if applicable.
• All benefits cease at your death, including
  health insurance.
• Beneficiary receives balance of contribution
  account, if any, and last pension check.

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TRS 1 Supplemental Option

• Must have been enrolled in TRS prior toJuly 1,
  1982.
• Must have paid supplemental contributions for
  minimum of five years prior to retirement,
• unless first enrolled prior to July 1, 1977,
• then must have made contributions for minimum of
  one year prior to retirement.
• continued

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TRS 1 Supplemental Option

• Survivors Benefit 35 of last contract salary,
• plus 10 for each dependent child up tofour
  children.
• Converts to a spouses pension when last
  dependent is ineligible.
• Spouses Pension 50 of retirement benefit.

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TRS Survivor Options

• Election of a survivor option
• reduces regular retirement benefit by an
  actuarial factor,
• based on age of member and members spouse or
  qualified same-sex partner at time of retirement.
• Health insurance eligibility continues for spouse
  or same-sex partner only if the survivor option
  is chosen.
• continued

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TRS Survivor Options

• Under 75 or 50 Joint and Survivor options, if
  the spouse dies, there is no change to the
  members benefit.
• Under 66-2/3 Last Survivor Option, whoever is
  remaining survivor receives66-2/3 benefit. If
  the spouse dies, the members benefit reduces.

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TRS Joint and Survivor Example

• Early retirement benefit of 1,184.65/month
• Member age 55.5
• Spouse age 54
• Member Survivor
• 75 JS 1,082.43 811.82
• 50 JS 1,114.48 557.24
• 66 2/3 LS 1,132.00 754.67

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Insurance Decisions

• Health Insurance Elections

• Medical (PERS Tiers II and III, TRS Tier II)
• Dental-Vision-Audio (DVA)
• Long-Term Care (LTC)

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PERS Medical Benefits

• Tier I Family medical coverage at retirement
  system-paid.
• Tier II System-paid family medical coverage at
  age 60 or 25 years of peace officer/fire fighter
  service, or 30 years of all other service. If
  retired prior to age 60, pays full premium until
  age 60. Open enrollment each year.
• Tier III Must have 10 years of service to
  receive Tier II medical benefits otherwise pays
  full premium. Open enrollment each year.

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TRS Medical Benefits

• Tier I System-paid family medical coverage at
  retirement.
• Tier II System-paid family medical coverage at
  age 60 or 25 years of TRS membership service.
• If member retires prior to age 60, pays full
  premium until age 60. Open enrollment each year.

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Medical Benefits

• The retiree medical plan covers member and
  eligible dependents.
• Eligible dependents are spouse, qualified
  same-sex partner, and dependent children.
• Dependent child means
• unmarried, dependent upon member for support, and
  under age 19 or under age 23 and registered at
  and attending on full-time basis accredited
  educational/ technical institution recognized by
  Department of Education and Early Development.
• Age limits do not apply to child who is totally
  and permanently disabled.

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Medical Benefits Summary

• 150 deductible per person, maximum three per
  family.
• Pays 80 of first 4,000 in covered claims for
  each person, then 100 of all covered claims for
  rest of year.
• Prescription drug coverage 8 brand-name, 4
  generic, 0 mail order.
• Lifetime maximum benefit 2,000,000 per person.
• Secondary to Medicare at age 65.

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Optional Insurance Plans

• Dental-Vision-Audio (DVA)
• Tier I Must elect at retirement.
• Tiers II, III May elect at open enrollment if
  medical coverage of same or higher level is also
  elected for first time.
• Long-Term Care (LTC)
• One enrollment at time of retirement only (all
  tiers).
• All tiers pay DVA and LTC premiums for as long as
  coverage is desired.

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Optional Insurance Plans

• Dental-Vision-Audio Coverage

• Dental 100 preventative services 80
  restorative services 50 prosthetic services
• 50 annual deductible for restorative and
  prosthetic services.
• Maximum 2,000 per year
• Vision No deductible, 80 of covered services
• Audio No deductible, 80 of covered services
• Maximum benefit 2,000 in 3-year period.

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Optional Insurance Plans

• Long Term Care (LTC)

• One time opportunity to elect at retirement.
• Three plans available
• Silver, Gold, and Platinum
• Can elect plan for self or self and spouse.
• Premiums based on age at retirement separate
  premium for each person covered.

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After Retirement Increases

• PERS Alaska Cost of Living Allowance

• 10 of base retirement benefit, minimum 50 per
  month
• Must be domiciled and physically present in
  Alaska
• Tier I eligible at retirement
• Tiers II and III eligible at age 65
• All disabled members are eligible

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After Retirement Increases

• TRS Alaska Cost of Living Allowance

• 10 of base retirement benefit per month
• Must be domiciled and physically present in
  Alaska
• Tier I eligible at retirement
• Tier II eligible at age 65
• All disabled members are eligible

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After Retirement Increases

• PERS Post Retirement Pension Adjustment (PRPA)

• Based on change in consumer price index (CPI)
  from year to year in Anchorage area.
• Must be age 60 or have been receiving benefits
  for five years.
• Members receiving disability benefits.
• Tier I eligible for two types ad hoc and
  automatic. If both are granted in a year, one
  yielding highest increase is used.
• Tiers II and III eligible for automatic PRPA.

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After Retirement Increases

• TRS Post Retirement Pension Adjustment (PRPA)

• Based on change in consumer price index (CPI)
  from year to year in Anchorage area.
• Must be age 60 or have been receiving benefits
  for eight years.
• Members receiving disability benefits.
• Tier I eligible for two types ad hoc and
  automatic. If both are granted in a year, one
  yielding highest increase is used.
• Tiers II and III eligible for automatic PRPA.

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PERS Working After Retirement

• Standard Option

• Alaska Statute 39.35.150 prohibits a member from
  working in a PERS-covered position while
  receiving benefits.
• When you go back to work, your benefit will be
  suspended until you terminate employment.
• When you terminate employment, your first benefit
  will be reinstated.
• You must apply for your second benefit.

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PERS Working After Retirement

• Types of Employment Allowed

• Work in a temporary or nonpermanent position for
  PERS employer
• Work in private sector
• Work in TRS-covered position

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TRS Working After Retirement

• Standard Option

• Alaska Statute 14.25.043 prohibits a member from
  working while receiving TRS retirement benefits
  and service at same time.
• Your benefit is suspended until you terminate
  employment.
• Earn additional service toward additional pension
  benefit.
• Your first retirement is automatically reinstated
  when you terminate employment.
• You must apply for your second benefit.

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TRS Working After Retirement

• Types Of Employment Allowed

• Work in a temporary or nonpermanent position for
  TRS employer
• Work in private sector
• Work in PERS-covered position

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Social Security

• If you work in a position that does not pay into
  Social Security, and have less than 30 years of
  qualifying Social Security earnings, you may be
  subject to Windfall Elimination Provision which
  will reduce your Social Security benefit.
• Benefit estimates received from Social Security
  do not include offset they must be specifically
  requested.
• Contact Social Security for more information
  (1-800-772-1213 www.ssa.gov)

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Contacts

• Division Regional Counselors

• Anchorage Office
• Debbie Bialka, Paul Carlson, Mark Rosier
• Tony Brakes, Paul Carlson
• QDRO
• Patti Bower
• Disability
• Judy Hall
• Statewide Seminars and Benefit Fairs

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Contacts

• Division Regional Counselors

• Roberto Aceveda
• Aleutians, Western Alaska, Kenai Peninsula
• Debbie Bialka
• Mat-Su
• Pam Couzin
• Fairbanks and Railbelt, Tok, Glennallen, Valdez
• Marla Christenson
• Southeast and AMH System

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Contacts

• DRB Customer Service Center
• [phone] or [phone]
• 1000 a.m. to 330 p.m.