How To Get A Pension From The Ersri

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Of Rhode Island Handbook

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Your Retirement Benefit Eligibility State and Teacher Eligibility State Correctional Officers Eligibility State Registered Nurses Eligibility Municipal Eligibility State and Teacher Cost-of-Living Adjustment (COLA)

Correctional Officers & MHRH Nurses COLA Municipal COLA Retirement Options Reduced Benefit Eligibility Early Retirement

Deferred Retirement Teachers‟ Survivors Benefits

Beneficiaries Benefits Applying for Retirement Pension Deductions and Retiree Health Benefits Post-Retirement Employment

Contact

:

This booklet was prepared exclusively for use by members of the Employees Retirement System of Rhode Island (ERSRI). It is not in-tended as a substitute for the Rhode Island General Laws (R.I.G.L.) nor will its interpretation prevail should a conflict arise between the contents of this booklet and Chapters 16, 36 and 45 of the R.I.G.L. Rules governing retirement are subject to change periodically either by statute of the Rhode Island Legislature or by regulation of ERSRI. The information contained in this booklet is provided for Rhode Is-land state employees, Rhode IsIs-land public school teachers, state correctional officers, state registered nurses, and general municipal employees of participating Rhode Island units of the Municipal Em-ployees Retirement System. Different retirement rules and require-ments apply to disability applicants, police & fire members, and members of the General Assembly. Contact ERSRI call center for additional information if you are in one of these categories.

Directions: ERSRI is located in downtown Providence, across from the Journal Bulletin. Take Exit 21 Downtown Providence off Route 95. Parking is available in nearby parking garages.

40 Fountain Street

Providence, Rhode Island 02903-1854

Call Center: 401-457-3900 / Fax: 401-222-2430 Website: www.ersri.org

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Your Retirement Benefit Eligibility State and Teacher Eligibility State Correctional Officers Eligibility State Registered Nurses Eligibility Municipal Eligibility State and Teacher Cost-of-Living Adjustment (COLA)

Correctional Officers & MHRH Nurses COLA Municipal COLA Retirement Options Reduced Benefit Eligibility Early Retirement

Deferred Retirement Teachers‟ Survivors Benefits

Beneficiaries Benefits Applying for Retirement Pension Deductions and Retiree Health Benefits Post-Retirement Employment

ERSRI Member Services Membership Information Contributions

Service and Purchase of Service Credit Refund & Rollover

5 6-7 8-9 10-13 14

15 16-21 24-25 26-28 30 22 29 30 31-39 40-42 43 44-47 48 49-50 51 52-54

Members

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Annual 1099-R

At the end of each January, retired members of the retirement sys-tem will receive a 1099-R form. The form provides the details concern-ing the benefit distributions you received durconcern-ing the current tax year and should be used in filing your federal income tax return.

Retirement Counseling Services

ERSRI offers group counseling at our Providence office. A benefit esti-mate and retirement forms are given at the group session. Schedule your appointment three to six months before retirement by contacting our call center at 401-457-3900.

eCompass Newsletters

ERSRI is going green! Active and retired members of the retirement

sys-tem will receive the eCompass Newsletters, a great way to get fast and

convenient updates on retirement news. To add your email address to

our system, simply go to www.ersri.org and create an account. Go to

Change Web Profile tab and update or add your email account. ERSRI Website

Visit our retirement website today at www.ersri.org and be sure to create an account and add your email address to get retirement news. The ERSRI website can help you better understand the retire-ment process, view real time information regarding your retireretire-ment account including member account balance, create an estimate of benefits, retire online, print forms, view monthly pension payroll, read our eCompass Newsletters and eHandbooks, as well as contact us.

eHandbook Series

Membership & Retirement Handbook Disability Handbook

Police & Fire Handbook

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What is the Employees Retirement System of Rhode Island?

Who governs the Employees Retirement System of Rhode Island?

The Employees Retirement System of Rhode Island (ERSRI) is a con-tributory defined benefit retirement system governed by Chapters 16, 36 and 45 of the Rhode Island General Laws. The plan provides retirement, disability, and survivor benefits to state employees, pub-lic school teachers, and municipal employees who are employed by a participating municipality.

The Employees Retirement System of Rhode Island is governed by a retirement board. The Board, which meets the second Wednesday of each month, establishes rules and regulations for the agency. The Board also approves each application for disability benefits and hears appeals by members who have been aggrieved by an admin-istrative decision of the executive director. Finally, the Board oversees the delivery of services and information to its membership of over 34,000active members and close to 24,000retirees. The retirement office staff is managed by an executive director who oversees a staff of 25 full-time employees.

The Board is composed of fifteen members chosen in accordance with Chapter 36 of the Rhode Island General Laws and is chaired by the General Treasurer. Its membership includes:

• General Treasurer;

• the director of administration or designee; • the budget officer or designee;

• 2 public member appointees of the Governor, subject to Senate approval;

• 2 public member appointees of the General Treasurer, subject to Senate approval;

• President of the League of Cities and Towns or designee;

• 2 active state employees or union representatives elected by ac-tive state membership;

• 2 active teacher or union representatives elected by active teach-er membteach-ership;

• municipal member or union representative elected by active mu-nicipal membership;

• 2 retired members elected by the plan retirees;

For those members elected by the membership or appointed by the Governor and General Treasurer, the term of office is four years.

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Who is eligible to become a member of the Employees Retirement System of Rhode Island?

State Employees: Any person employed by the State of Rhode Island in a posted position of at least 20-hours-per-week and consistently works eve-ry week of the year at a minimum of 20-hours-per week is eligible for membership in the Employees Retirement System of Rhode Island. Your employment cannot be of a casual or seasonal nature and your business time must be devoted exclusively to the service of the state.

Correctional Officers - members employed as assistant director (adult services), assistant deputy director, chief of inspection, and associate directors, correctional officer, chief of security, work rehabilitation pro-gram supervisor, supervisor of custodial records and reports, and classifi-cation counselor within the department of corrections as provided in R.I.G.L. §36-10-9.2. For information on retirement eligibility, please see page 24.

Registered Nurses - members employed as registered nurses within the department of mental health, retardation, and hospitals as provided in R.I.G.L. §36-10-9.3. For information on retirement eligibility, please see page 26.

Municipal Employees: Any person employed in a posted position of at least 20-hours-per-week and consistently works every week of the year at a minimum of 20-hours per week is eligible for membership in the Munici-pal Employees Retirement System. Your employment cannot be of a cas-ual or seasonal nature and your business time must be devoted exclu-sively to the service of the participating municipality. City or town council members are eligible for membership as provided in R.I.G.L. §45-21-14.1. Public School Teachers: Public school teachers are eligible for member-ship in the Employees Retirement System provided they are:

(1) certified by the Board of Regents;

(2) engaged in teaching as a principal occupation; and

(3) regularly employed on at least a half-time basis as a teacher in any city, town, regional school district or collaborative.

The statutory definition of teacher, found in R.I.G.L. §16-16-1, allows the following permissible titles: teacher, supervisor, principal, assistant princi-pal, superintendent or assistant superintendent, director, assistant direc-tor, coordinadirec-tor, consultant, dean, assistant educational administradirec-tor, nurse teacher, and attendance officer, or any person working within the educational system certified by the Board of Regents; or occupational or physical therapists licensed by the department of health and employed by a school committee. Other permissible titles are school business ad-ministrators and school psychologists. School business adad-ministrators are not required to hold a teaching certification.

Am I required to become a member of the system?

Yes. By law, membership in the Employees or Municipal Employees Retirement System is a condition of employment and is required of all employees who meet the Board‟s eligibility requirements.

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Contributions

How much am I required to contribute?

The amount that you contribute to the system is based upon a percentage of your total salary, excluding overtime.

* Those public employees whose municipalities have Cost of Living Adjustment (COLA) provisions, or police and fire members whose municipalities have accepted the 20-year plan, contribute an extra 1% into the retirement system for each additional benefit provision.

Type of Employee Percentage

Teachers State Employees Police & Fire Members Municipal Employees

9.5% 8.75% 7.00%* 6.00%*

Each year, the retirement system‟s actuary determines the amount of money necessary to fund the benefits of retirees and future retirees of the system. Based on the liability of the system, the actuary determines a percentage of payroll, or employer contribution rate, necessary to properly fund the required benefits. The actuary determines a different employ-er contribution rate for state employees, teachemploy-ers, and each participating municipality.

What does the state or municipality contribute to the retirement system?

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What happens to the money that I contribute to the system?

Once you are enrolled as an active member in the Employees or Mu-nicipal Employees Retirement System, an account is established in your name. Your employer deducts your retirement contributions and transfers them to the system, where they are invested. Contributing members can view their member account balance via their website account which contains the real time contributions credited to their individual account.

How are my contributions invested?

Your contributions to the Employees and Municipal Employees Retire-ment System of Rhode Island are deposited into a trust fund set aside for the exclusive benefit of the members of the retirement system and their beneficiaries.

The investments of the fund are managed by the nine-member State Investment Commission (SIC), which is chaired by the General Treas-urer. The other members of the SIC are the state‟s Director of Admin-istration or designee, a director of the Higher Education Assistance Authority or designee to be appointed by the General Treasurer, an active or retired member of the retirement system (or union official) appointed by the General Treasurer, two members of the general public appointed by the General Treasurer and three members of the general public appointed by the Governor. Appointments by the General Treasurer and Governor are subject to Senate approval. The SIC meets monthly, but more frequently as needed, to review and analyze the investment performance of the state‟s pension fund.

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Service and Purchase of Service Credit

How do I receive credit towards my retirement allowance?

Generally, the number of years you have worked and contributed to the retirement system will determine the amount of your retirement al-lowance. If you are a state or municipal employee, you will receive one year of retirement credit for each full year worked and contributed. Any reduction in hours may result in a reduction of service credit. Your post-ed position must be at least 20-hours-per-week and you must consistent-ly work every week of the year at a minimum of 20-hours-per week. Cas-ual or seasonal employment is excluded. If you are a teacher, you will receive a year of retirement credit for each school year in which you contribute and are employed at least 135 full days.

Membership in other Participating Plans or Units

Time spent within other participating plans or units of the retirement sys-tem can be used towards your eventual retirement. For example, if you were employed by both the Town of Bristol and the State of Rhode Is-land (not concurrently), you may count both service periods towards your eventual retirement. Municipal credit must have been earned with-in a participatwith-ing unit of the Municipal Retirement System.

Can I purchase retirement service credit?

Yes, a member may be eligible to purchase retirement service credit for other types of employment, or periods where the member was on offi-cial leave or laid off from contributing employment. A total of five years of purchased service credit may be added to your total years of ser-vice, but as of June 16, 1991 for state employees and December 31, 1992 for municipal employees, all members must have ten years of tributing service in order to vest. Service credit purchases are not con-sidered contributing service. The next few pages contain a description of some of the more common types of credit you may be eligible to purchase as a member of the Employees Retirement System (ERS) or Municipal Employees Retirement System (MERS).

• Restoration of Service Credit – Withdrawal or Refund Payback

If you return to membership after withdrawing your contributions upon separation from service, you may restore your credits after completing one year of service from the date of your return. You must pay into the system the amount you had refunded to you, plus interest. Purchase of withdrawn service credit is not limited to 5 years, and is not included in the 5-year purchase limit. Restoration of contributing service credit will effectively restore your retirement credit in the years it was originally earned, and restored contributing service does count as contributing

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• Official Leave of Absence

You may purchase up to four years of credit for time spent on an offi-cial leave of absence from your employment. You must return to ac-tive employment for at least one year before you are eligible to make this purchase. MERS members must return to work immediately after official leave. For state employees and teachers, requesting this pur-chase after June 16, 2009, you must pay into the system the full actu-arial cost of such time based on your age and salary at the time of the purchase request (see actuarial cost chart on page 12). For ex-ample, if your current salary at time of purchase request is $48,000 and you are 54 and looking to purchase one year of official leave of absence, the purchase cost under the new law will be $9,600 ($48,000 current salary X 20% actuarial factor based on current age of 54 = $9,600). For members of MERS, you must pay into the system the amount you would have contributed to the system, plus interest.

• Official Lay-off

You may purchase up to one year of credit for time spent on an offi-cial lay-off, provided you were not on offioffi-cial leave without pay and did not withdraw your retirement contributions while laid off. You must return to service from the layoff (no termination of employment). For state employees and teachers requesting this purchase after June 16, 2009, you must pay into the system the full actuarial cost of such time based on your age and salary at the time of the purchase request (see actuarial cost chart on page 12). For members of MERS, you must pay the amount you would have contributed to the system for the lay -off, plus interest.

• Armed Service Credit

If you served in the Armed Services prior to your employment as a public employee, you may purchase up to a maximum of four years credit for time spent on active duty for service in the US Armed Ser-vices or Reserves or the Merchant Marine. The purchase of credit is based upon 10% of your first full year of earnings. If you began your membership in the system after July 1, 1980, you may buy your military credits interest free provided they are purchased within your first five years of membership in the system.

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• Out-of-State and Private School Teaching

If you are a public school teacher within the State of Rhode Island, you may be eligible to purchase up to five years of out-of-state teaching or private school teaching time. You will be charged the full actuarial cost of such time based on your age and salary at the time of the purchase (see below chart).

• Credit for Service in a Non-Participating Municipality

Members may purchase service credit for time spent within oth-er municipalities within Rhode Island that are not part of MERS, provided the service credit is being used in only one retirement system. For example, you might be eligible to purchase time spent working for the City of Providence (which is not a MERS plan). You will be charged full actuarial cost based on your age and salary at the time of the purchase (see below chart).

• Other types of credit

Other types of employment may also be eligible for purchase, but may depend on your current employment or other factors. Visit www.ersri.org for information on other types of service credit purchases, or contact ERSRI.

When can I purchase creditable service?

You must be an active member of the retirement system in or-der to purchase retirement credit. You cannot purchase time towards your retirement after you retire or terminate employ-ment, or if you are an inactive member (non-contributing for more than one year).

Age %

Under 25 12

25-29 13

30-34 14

35-39 15

40-44 16

45-49 18

50-54 20

55-59 22

60 and Over 24 Actuarial Costs

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Information on Service Credit Purchases

• No member may purchase more than five years of service credit

as of January 1, 1995. Service credit purchases are not

consid-ered contributing service toward vesting.

• Time purchased for ERSRI service credit cannot be credited to-ward a pension in another retirement system.

• Restoration of contributing service credit is not considered a ser-vice credit purchase and is not subject to the five-year limitation.

However, this service does count for vesting purposes.

• Wage and salary information for calculation of service credit purchases cannot be used for calculation of average salary for retirement benefits. Only salary earned and paid for perfor-mance of duty for covered employment shall be used for calcu-lating average salary for retirement benefits.

How do I purchase creditable service?

The ERSRI website at www.ersri.org contains a listing of the various types of service credit you may be eligible to purchase, and the corresponding request form for each type of purchase. Simply download the appropri-ate form for your purchase, have it completed by the employing authori-ty or agency indicated on the form, and submit the completed form to the Retirement Office for processing. If you have questions about the purchase, you may contact ERSRI.

What are my payment options?

You may pay either by lump sum, payroll deduction via installment agreement, or rollover pre-tax dollars from a qualified plan (i.e. 401K). The payment selection made is irrevocable consistent with federal law. A member may not enter into an installment agreement and make a lump sum payment, nor may a member enter into a lump sum agree-ment and make installagree-ments.

What if I am planning to retire and have an installment pur-chase in progress?

If retiring, you must contact ERSRI in advance for the option of either pro-rating the installment agreement or being billed for the remain-ing portion. The employer‟s written confirmation of your termination will be required.

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If I leave my job, can I take a cash refund or rollover my retirement contributions?

Yes. If you leave or terminate from participating service for any reason other than death or retirement, you may apply to receive a cash refund of your contributions, or you may rollo-ver to an IRA or another qualified retirement plan. Members receive no interest on the return of contributions from the re-tirement system.

Cash refunds are subject to 20% federal withholding, and you may also be subject to an IRS penalty for early withdrawal depending on your age at the time of withdrawal. Normal processing of cash refunds is 35 days after date of termina-tion, in order to allow posting of all retirement contributions to your account.

If you wish, you may rollover your contributions to an IRA or another qualified retirement plan such as a 401k. Forms for rollover are available on our website at www.ersri.org or by contacting the ERSRI call center. If you have created a user account on our website, you may simply apply online for your refund once you have terminated.

Can I borrow against my retirement account, due to hardship?

No. Rhode Island General Law allows a return of contributions only upon termination of employment. Members may not withdraw funds without terminating, nor may they borrow from their ERS or MERS account.

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Your Retirement Benefit Eligibility

When am I eligible for a retirement benefit?

During 2005 and 2009, a series of reforms have modified the retirement benefit structure for state employees and public school teachers . With these reforms, schedule type has become an important factor in deter-mining eligibility. To determine when you are eligible for a retirement benefit, keep in mind the following:

What is Contributing Service?

Each active member of the retirement system shall contribute an amount of his or her compensation required by statute in the form of deductions from compensation for services rendered. Each member will receive one year of contributing service credit for each full year worked and contributed (for teachers it is each school year in which a teacher worked and contributed at least 135 full days). With the exception of restoration of withdrawn contributions, pur-chased service credit is not considered contributing service. When will I be vested?

Members are vested for pension benefits after they attain at least ten full years of contributing service as a contributing member of the employee‟s retirement system.

• Can I combine service for vesting?

If you have prior contributing retirement service credit in the Municipal Employees Retirement System (MERS) from previous municipal employment, it will count for vesting with your ERS service credit, and vice versa, provided it is not overlapping employment. Service credit is combined when you retire, in the plan under which you retire.

When will I be pension eligible?

Members that are pension eligible are those that have met the spe-cific requirements of statutes to retire and begin collecting a pen-sion benefit (see eligibility outlined on pages 16-30), but at minimum must have at least ten full years of contributing service to be vested. The eligibility requirements for collecting your benefit vary depend-ing on which benefit structure and plan you are in (ERS or MERS). If you withdraw from service before you have met the requirements to retire, but it was after you accumulated ten years of contributing service to vest and you left your contributions in the system, you may be eligible to receive a deferred retirement benefit when you reach age of eligibility (see page 43).

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Effective October 1, 2009, changes were enacted under H 5983Aaa, Article 7 Substitute A as amended in the 2009 legislative session. State employees and teachers that were pension eligible to retire at Sep-tember 30, 2009 are not affected by the changes, even if they do not retire, except for changes relating to purchase of service credit and accidental disability. If you are currently receiving a monthly pension payment, none of the changes apply to you or affect your current pension benefit.

How do I know if I was eligible to retire at September 30, 2009?

For state employees and public school teachers it is important to first determine whether you are a Schedule A or Schedule B member.

Who is Schedule A and eligible to retire at September 30, 2009?

State employees (excluding Correctional Officers and MHRH Nurses) or public school teachers vested with at least 10 years contributing service by July 1, 2005 are Schedule A members. To be eligible, these members had to meet either Schedule A eligibility criteria by Septem-ber 30, 2009 of 28 years of service credit at any age, or 10 years of contributing service credit at age 60. Members that met these criteria by September 30, 2009 remain Schedule A members and are not af-fected by the changes, even if they do not retire, except for changes relating to purchase of service credit and accidental disability.

Who is Schedule B and eligible to retire at September 30, 2009?

State employees (excluding Correctional Officers and MHRH Nurses) or public school teachers vested with at least 10 years contributing service after July 1, 2005 are Schedule B members. To be eligible, the-se members had to meet either eligibility criteria by September 30, 2009 of 29 years of service credit at age 59, or 10 years of contributing service credit at age 65. Members that met these criteria by Septem-ber 30, 2009 remain Schedule B memSeptem-bers and are not affected by the changes, even if they do not retire, except for changes relating to purchase of service credit and accidental disability.

State Employees and Teachers Eligible

for Retirement at September 30, 2009

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Schedule B

What are my service credit rates if eligible at September 30, 2009?

State Employees & Teachers

Schedule A Schedule B

Years 1-10: Years 11-20: Years 21-34: Years 35:

1.7% 1.9% 3% 2%

Years 1-10: Years 11-20: Years 21-25: Years 26-30:

1.6% 1.8% 2.0% 2.25%

Years 31-37: 2.5%

Year 38: 2.25%

What is the most my pension can be?

The maximum percent of final average salary (FAS) that a state em-ployee (excluding Correctional Officers and MHRH Nurses) or a public school teacher may achieve if eligible to retire at September 30, 2009 as either a Schedule A or Schedule B member are listed below.

Schedule A

80% FAS _{75% FAS}

How much will I receive in retirement benefits?

The amount of your retirement benefit will be determined by two fac-tors: your years of creditable service and your final average salary (FAS).

For Schedule A and Schedule B state employees (excluding Correction-al Officers and MHRH Nurses) and public school teachers eligible to re-tire at September 30, 2009, the FAS is calculated using your three

high-est consecutive years.

The service credit rates used to determine your benefit are based on your schedule type and the above chart.

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Who is Schedule A and ineligible to retire at September 30, 2009?

State employees (excluding Correctional Officers and MHRH Nurses) or public school teachers vested with at least 10 years contributing service by July 1, 2005 are Schedule A members. However, if these members did not meet the Schedule A eligibility criteria by September 30, 2009 of 28 years of service credit at any age, or 10 years of contributing service credit at age 60, they are now aligned with a new schedule type called Schedule AB.

What are the service credit rates for Schedule AB members?

For Schedule AB state employees (excluding Correctional Officers and MHRH Nurses) or public school teachers, who were ineligible to retire by September 30, 2009, the law change preserves all Schedule A service cred-it rates earned as of September 30, 2009. All service credcred-it rates earned after September 30, 2009 are at the Schedule B rates (see chart on page 17).

For example, if you are a Schedule AB state employee with 20 years of vice credit at September 30, 2009, you would have preserved a 36% ser-vice credit factor using Schedule A rates for your first 20 years of serser-vice (Year 1-10 at 1.7% = 17% plus Year 11-20 at 1.9% = 19% for total of 36%). This service earned as of September 30, 2009 becomes your frozen service credit. For your next year of service credit after September 30, 2009, you would earn 2.0% under the Schedule B rates for Year 21 for a total service credit rate of 38% by September 30, 2010.

Who is Schedule B and ineligible to retire at September 30, 2009?

State employees (excluding Correctional Officers and MHRH Nurses) or public school teachers vested with at least 10 years contributing service after July 1, 2005 are Schedule B members. However, if these members did not meet the Scheduled B eligibility criteria by September 30, 2009 of 29 years of service credit at age 59, or 10 years of contributing service credit at age 65, they are now aligned with a new schedule type called Sched-ule B1. For SchedSched-ule B1 members, there is also a reduced benefit eligibility at age 55 if you have at least 20 years of service; this is explained further on pages 40-42.

What about New Hires into the retirement system?

New state employees (excluding Correctional Officers and MHRH Nurses) or public school teachers that become members of the employees retire-ment system after September 30, 2009 are Schedule B2 members. They are eligible to retire at age 62 with 29 years of service, or age 65 with 10 years contributing service. For Schedule B2 members, there is also a reduced benefit eligibility at age 55 if you have at least 20 years of service; this is explained further on pages 40-42.

State Employees and Teachers Ineligible

for Retirement at September 30, 2009

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Schedule B1

What are the service credit rates for Schedule B1 or Schedule B2 members?

State Employees & Teachers Schedule B1 and Schedule B2

1.6% 1.8% 2.0% 2.25%

Years 31-37: 2.5%

Year 38: 2.25% What is the most my pension can be?

The maximum percent of final average salary (FAS) that a member may achieve for each schedule type are listed below.

Schedule AB

80% FAS _{75% FAS}

For state employees (excluding Correctional Officers and MHRH Nurses) and public school teachers ineligible to retire at September 30, 2009 or new hires after that date (now called Schedule AB, Schedule B1, and Schedule B2), the FAS will be based on the five highest consecutive

years of salary rather than the previous basis of three highest

consecu-tive years.

The service credit rates used to determine your benefit if you are Schedule AB are explained on page 18. The service credit rates used to determine your benefit if you are Schedule B1 and Schedule B2 are based on the above chart.

Schedule B2 75% FAS

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What Changes were made to Retirement Eligibility if I’m ineligible to retire at September 30, 2009 or a new hire after that date?

For State employees (excluding Correctional Officers and MHRH Nurses) and public school teachers who were ineligible to retire at September 30, 2009 or were new hires after that date (also known as Schedule AB, Schedule B1, and Schedule B2 as defined on page 18), the new law establishes a minimum retirement age of 62 for all members, except those Schedule B members (Schedule B1 and Schedule B2) who retire with less than 29 years of service; their retirement eligibility remains age 65 with a minimum of 10 years of contributing service credit.

The law provides a proportional downward adjustment of the minimum retirement age of 62 based on years of service credited as of Septem-ber 30, 2009* (also known as frozen service). It is important to note that a proportional downward adjustment of the minimum retirement age of 62 applies to Schedule AB members and only Schedule B1 members who retire with 29 or more years of service.

Here is an example to help you understand how the proportional down-ward adjustment formula works. For simplicity, we are using whole num-bers for age and years of service; however, eligibility calculations are done based on your exact age and years of service at September 30, 2009. Once you know your current benefit structure at September 30, 2009 as described on page 18, you are ready to determine your retire-ment eligibility under the new law.

Let‟s take a Schedule A ERSRI member who began service with the state at age 33 and had 15 years of total service credit as of September 30, 2009 (also known as frozen service). As of September 30, 2009, this member was ineligible to retire under Schedule A because they did not meet the eligibility criteria of 28 years of service credit at any age, or 10 years of contributing service credit at age 60. This member is now called Schedule AB. Under the new law, the first step would be to de-termine the member‟s FIRST point of retirement eligibility under the laws in effect on September 30, 2009.

*If you requested a purchase of service credit before September 30,

2009 and it is determined by ERSRI to be eligible to be purchased, it will be applied towards your service credit balance at September 30, 2009 and will aide in the calculations used to reduce retirement eligi-bility age from age 62 (or age 55 for Correctional Officers and MHRH Nurses).

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In this example the FIRST date of retirement eligibility would be age 60 with 27 years of service. This member will not achieve 28 years of service until age 61. Therefore, the member reaches age 60 first. According to the proportion-al formula and the new minimum retirement age of 62, the adjustment to the member‟s minimum retirement age would look like this:

Step 1: Divide the member‟s years of service as of September 30, 2009 (also known as frozen service) by the number of years required to meet the first point of retirement eligibility (when member would first be able to collect a benefit). In this example, it would be 27 years.

15 years ÷ 27 = .56

Step 2: Take the difference between the new minimum retirement age of 62 and the member‟s FIRST age of retirement eligibility under the laws in effect on September 30, 2009 which , in this example, is 60 years old.

62 - 60 = 2

Step 3: Multiply the fraction (.56) from Step 1 by the age difference in Step 2. .56 x 2 = 1.12

Step 4: Subtract the value in Step 3 from the age 62 minimum retirement age: 62-1.12 = 60.88

In this example, the new minimum retirement age for this member would be 60 years, 10 months and 17 days. When this member reaches this new mini-mum retirement age, he/she is pension eligible to retire and begin collecting a pension benefit. If this member leaves employment before minimum retire-ment age date is reached, he/she will have to wait for this age date to begin collecting a pension benefit.

The ERSRI website has minimum retirement age calculators available online to determine estimates of your minimum retirement age as a result of the changes enacted under H 5983Aaa, Article 7 Substitute A as amended in the 2009 legislative session. To use the calculators, you will need to create an account online at our website www.ersri.org. For information on how to use the Minimum Retirement Age Calculator, you may view our Fall 2009 eCom-pass Newsletter available on our website.

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Cost-of-Living Adjustment (COLA)

State Employees and Teachers

What is my Cost-of-Living Adjustment (COLA)?

Schedule A Retirees (eligible to retire at September 30, 2009)

A 3 percent compounded COLA is payable beginning the third Janu-ary after date of retirement and every JanuJanu-ary thereafter. For exam-ple, if you are a state employee or public school teacher eligible to retire by September 30, 2009 and retire under Schedule A in August 2010, your first COLA will be reflected in your January 2013 pension benefit.

Schedule AB Retirees

For Schedule AB members (those state employees and public school teachers who were Schedule A and ineligible to retire at September 30, 2009), the law changes the COLA from 3 percent compounded annually to the COLA provided under Schedule B. It will be the lesser of 3 percent or the percentage of increase in the Consumer Price In-dex for all Urban Consumers (CPI-U) published as of September 30 of the prior calendar year and is compounded annually. COLA begins the month after the third anniversary date of retirement (See below Article 16 Substitute A law changes effective June 12, 2010). Schedule B, Schedule B1, and Schedule B2 Retirees

Beginning the month after the third anniversary of the date of your retirement, the COLA is the lesser of 3 percent or the percentage of increase in the Consumer Price Index for all Urban Consumers (CPI-U) published as of September 30 of the prior calendar year and is com-pounded annually (See below Article 16 Substitute A law changes ef-fective June 12, 2010).

If you were ineligible to retire as of September 30, 2009 but become eligible to retire after June 12, 2010 (passage of Article 16 Substitute A at 2010 legislative session), this law will impact your COLA. If you were eligible to retire as of June 12, 2010, this law will not affect you.

Under Article 16 Substitute A, a retiree‟s COLA will be the COLA provid-ed under Schprovid-edule B as explainprovid-ed above, but the COLA will now only apply to the first thirty-five thousand dollars ($35,000) of retirement al-lowance, indexed annually, and shall commence upon the retiree‟s third (3rd) anniversary of the date of retirement or when he/she reach-es age sixty-five (65), whichever is later. The thirty-five thousand dollar ($35,000) limit will increase annually by the percentage increase in the Consumer Price Index for all Urban Consumers (CPI-U) as published by the United States Department of Labor Statistics determined as of Sep-tember 30 of the prior calendar year or three percent (3%), whichever is less. For more information, you may view our Summer 2010 eCom-pass Newsletter available on our website.

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Retirement Eligibility for

State Correctional Officers

and

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State Correctional Officers

With recent reforms to pension benefits for correctional officers, schedule type has become an important factor in determining retirement eligibil-ity. Effective October 1, 2009, changes were enacted under H 5983Aaa, Article 7 Substitute A as amended in the 2009 legislative session. Correc-tional officers that were pension eligible to retire at September 30, 2009 are not affected by the changes, even if they do not retire, except for changes relating to purchase of service credit and accidental disability. If you are currently receiving a monthly pension payment, none of the changes apply to you or affect your current pension benefit.

Who is eligible to retire at September 30, 2009 (Schedule CO)?

Correctional officers who have attained the age of fifty (50) years may be retired provided the member shall have completed twenty (20) years of total service within the department of corrections and who retires be-fore October 1, 2009 or is eligible to retire as of September 30, 2009 are now aligned with a new schedule type called Schedule CO. These members are not affected by the changes, even if they do not retire, except for changes relating to purchase of service credit and acci-dental disability. Purchases of military and official leaves within the de-partment count toward 20 years.

Who is ineligible to retire at September 30, 2009 (Schedule C1)?

For correctional officers who become eligible to retire on or after Octo-ber 1, 2009, benefits are available once they have attained the age of fifty-five (55) and have completed at least twenty-five (25) years of total service within the department of corrections. These members are now aligned with a new schedule type called Schedule C1. Purchases of military and official leaves within the department count toward 25 years. For Schedule C1, the law provides a proportional downward adjustment of the minimum retirement age of 55 based on years of service credited as of September 30, 2009 (also known as frozen service). The ERSRI web-site has minimum retirement age calculators available online to deter-mine estimates of your minimum retirement age as a result of the chang-es enacted under H 5983Aaa, Article 7 Substitute A as amended in the 2009 legislative session. To use the calculators, you will need to create an account online at our website www.ersri.org. For information on how to use the Minimum Retirement Age Calculator, you may view our Fall 2009 eCompass Newsletter available on our ERSRI website.

What about New Hires into the retirement system (Schedule C2)?

Correctional officers that become members of the employees retire-ment system after September 30, 2009 are called Schedule C2. These correctional officers are eligible to retire once they have attained the age of fifty-five (55) and have completed at least twenty-five (25) years of total service within the department of corrections.

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Correctional Officers Schedule C0, C1, C2

Year 1-30 2.0% Year 31 6.0% Year 32 5.0% Year 33 4.0% Year 34 3.0% Year 35 2.0%

The maximum percent of final average salary (FAS) that a correctional officer may achieve is 80% for each schedule type listed below.

Schedule C0 Schedule C1 Schedule C2

Schedule CO

FAS is calculated using your three highest consecutive years. Schedule C1 and Schedule C2

FAS will be based on the five highest consecutive years of salary rather than the previous basis of three highest consecutive years.

For all correctional officer schedule types, the service credit rates used to determine your benefit are based on the chart above.

What are the service credit rates for correctional officers?

80% FAS

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26

State Registered Nurses

With recent reforms to pension benefits for registered nurses, schedule type has become an important factor in determining eligibility. Effective October 1, 2009, changes were enacted under H 5983Aaa, Article 7 Sub-stitute A as amended in the 2009 legislative session. Registered Nurses that were pension eligible to retire at September 30, 2009 with 25 years at age 50 are not affected by the changes, even if they do not retire, ex-cept for changes relating to purchase of service credit and accidental disability. If you are currently receiving a monthly pension payment, none of the changes apply to you or affect your current pension benefit.

Who is eligible to retire at September 30, 2009 (Schedule MO)?

Registered nurses within the department of mental health, retardation, and hospitals (MHRH Nurses) who vested with at least 10 years contrib-uting service by July 1, 2005 were Schedule A members. To be eligible to retire at September 30, 2009 as MHRH Nurses, these members must have attained the age of fifty (50) years and shall have completed twenty-five (25) years of total service within the department of mental health, retar-dation and hospitals (MHRH) and are now aligned with a new schedule type called Schedule MO. These members are not affected by the changes, even if they do not retire, except for changes relating to pur-chase of service credit and accidental disability. Purpur-chases of military and official leaves in the department count toward 25 years.

Who is Schedule A and ineligible to retire at September 30, 2009 (Schedule MAB)?

MHRH Nurses who vested with at least 10 years contributing service by July 1, 2005 were Schedule A members. However, if these members did not meet the MHRH Nurse eligibility criteria by September 30, 2009 of age 50 with 25 years of total service credit within MHRH, they are now aligned with a new schedule type called Schedule MAB. To become eligible to retire on or after October 1, 2009 as an MHRH Nurse, you must attain the age of fifty-five (55) and have completed at least twenty-five (25) years of total service within MHRH. Purchases of military and official leaves in the department count toward 25 years.

What are the service credit rates for Schedule MAB members ?

For Schedule MAB members, who were Schedule A and ineligible to re-tire as an MHRH Nurse at September 30, 2009, the law change preserves all Schedule A service credit rates earned as of September 30, 2009. All service credit rates earned after September 30, 2009 are at Schedule B rates (see chart on page 17).

For example, if you are a Schedule MAB with 20 years of service credit at September 30, 2009, you would have preserved a 36% service credit fac-tor using Schedule A rates for your first 20 years of service. This service earned as of September 30, 2009 becomes your frozen service credit. For your next year of service credit after September 30, 2009, you would earn 2.0% under Schedule B rates for Year 21 for a total service credit rate of 38% by September 30, 2010.

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Who is Schedule B and ineligible to retire at September 30, 2009 (Schedule MB1)?

MHRH Nurses who vested with at least 10 years contributing service after July 1, 2005 were Schedule B members. However, if these members did not meet the MHRH Nurse eligibility criteria by September 30, 2009 of age 50 with 25 years of total service credit within MHRH, they are now aligned with a new schedule type called Schedule MB1.

For Schedule MAB and Schedule MB1, the law provides a proportional downward adjustment of the minimum retirement age of 55 based on years of service credited as of September 30, 2009 (also known as frozen service).

What about New Hires into the retirement system (Schedule M2)?

MHRH Nurses that become members of the employees retirement system after September 30, 2009 are called Schedule M2. They are eligible to re-tire once they have attained the age of fifty-five (55) and have completed at least twenty-five (25) years of total service within MHRH.

What are the service credit rates if Schedule MB1 or Schedule M2 members?

MHRH Nurses Schedule MB1 and M2

1.6% 1.8% 2.0% 2.25%

Years 31-37: 2.5%

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The amount of your retirement benefit will be determined by two factors: your years of creditable service and your final average salary (FAS). Schedule M0

FAS is calculated using your three highest consecutive years.

The service credit rates used to determine your benefit are based on Schedule A rates (see chart on page 17).

Schedule MAB

The law change preserves all Schedule A service credit rates earned as of September 30, 2009. All service credit rates earned after September 30, 2009 are at Schedule B rates (see chart on page 17 and example on page 26).

Schedule MB1 and Schedule M2

The service credit rates used to determine your benefit are based on the chart on page 27.

The ERSRI website has minimum retirement age calculators available online to determine estimates of your minimum retirement age as a result of the changes enacted under H 5983Aaa, Article 7 Substitute A as amended in the 2009 legislative session. To use the calculators, you will need to create an account online at our website www.ersri.org. For infor-mation on how to use the Minimum Retirement Age Calculator, you may view our Fall 2009 eCompass Newsletter available on our ERSRI website.

Schedule M0 Schedule MAB Schedule MB1 Schedule M2 80% FAS

80% FAS 75% FAS

The maximum percent of final average salary (FAS) that a MHRH Nurse may achieve for each schedule type is listed below.

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What is my Cost-of-Living Adjustment (COLA)?

Schedule CO and Schedule MO Retirees (eligible to retire at September 30, 2009)

A 3 percent compounded COLA is payable beginning the third January after date of retirement and every January thereafter. For example, if you are a state correctional officer or MHRH Nurse eligible to retire by Septem-ber 30, 2009 and retire in August 2010, your first COLA will be reflected in your January 2013 pension benefit.

Schedule MAB Retirees

For Schedule MAB members (those MHRH Nurses ineligible to retire at Sep-tember 30, 2009), the law changes the COLA from 3 percent compound-ed annually to the COLA providcompound-ed under Schcompound-edule B. It will be the lesser of 3 percent or the percentage of increase in the Consumer Price Index for all Urban Consumers (CPI-U) published as of September 30 of the prior calendar year and is compounded annually. COLA begins the month after the third anniversary date of retirement (See below Article 16 Substi-tute A law changes effective June 12, 2010).

Schedule C1, Schedule C2, Schedule MB1 and Schedule M2 Retirees Beginning the month after the third anniversary of the date of your retire-ment, COLA is the lesser of 3 percent or the percentage of increase in the Consumer Price Index for all Urban Consumers (CPI-U) published as of Sep-tember 30 of the prior calendar year and is compounded annually (See below Article 16 Substitute A law changes effective June 12, 2010). If you were ineligible to retire as of September 30, 2009 but become eligi-ble to retire after June 12, 2010 (passage of Article 16 Substitute A at 2010 legislative session), this law will impact your COLA. If you were eligible to retire as of June 12, 2010, this law will not affect you.

Under Article 16 Substitute A, a retiree‟s COLA will be the COLA provided under Schedule B as explained above (i.e. Schedule MAB, Schedule C1, etc), but the COLA will now only apply to the first thirty-five thousand dol-lars ($35,000) of retirement allowance, indexed annually, and shall com-mence upon the retiree‟s third (3rd) anniversary of the date of retirement or when he/she reaches age sixty-five (65), whichever is later. The thirty-five thousand dollar ($35,000) limit will increase annually by the percent-age increase in the Consumer Price Index for all Urban Consumers (CPI-U) as published by the United States Department of Labor Statistics deter-mined as of September 30 of the prior calendar year or three percent (3%), whichever is less. For more information, you may view our Summer 2010 eCompass Newsletter available on our website.

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Municipal Employees (MERS)

When am I eligible to retire?

If you are a municipal employee, you may retire at any age with 30 years of service credit, or at age 58 with 10 years con-tributing service.

What are my service credit rates?

For Municipal Employees, you earn two percent (2%) for each year of service credit.

The maximum percent of final average salary (FAS) that a mu-nicipal member may achieve is 75 percent.

The amount of your retirement benefit will be determined by two factors: your years of creditable service and your final aver-age salary (FAS).

FAS is calculated using your three highest consecutive years. The service credit rates used to determine your benefit are based on two percent for each year of service credit.

Cost-of-Living Adjustment (COLA) - Municipal Retirees

Municipal retirees receive a cost-of-living adjustment only if the municipality from which the member is retiring has adopted a COLA provision. If the COLA has been adopted, it is 3 percent non-compounded effective on the next January following your retirement.

For all retirees

In all cases, prior to retirement you must sign a statement indi-cating that you have not been convicted of or pled guilty to any crime related to your public office or public employment, as defined in R.I.G.L. Section 36-10.1-2.

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Retirement Options

Rhode Island General Law may allow you to choose from different pen-sion payment options when you retire. The SRA Plus option is not availa-ble to any Police and Fire members, those applying for a Disability Re-tirement, MHRH Nurses, and any state employee, public school teacher, or correctional officer who has not completed at least ten years of con-tributory service on or before July 1, 2005.

SRA Plan (Service Retirement Allowance), Option #1 (100% Survivor op-tion), Option #2 (50% Survivor opop-tion), and SRA PLUS (Service Retirement Allowance Plus) are explained in the following pages. Note that all op-tions use the SRA Plan as the base allowance figure.

• SRA Plan (Service Retirement Allowance)

The SRA Plan allowance is based on your creditable service and salary as a public employee. All pension payments will stop upon your death. If you select the SRA Plan, you cannot change your retirement option after the date of retirement. On the following pages are examples of pension benefit calculations that determine the SRA benefit.

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SRA Plan example – Schedule A (vested as of 7/1/05) and eligible to retire at September 30, 2009

Ms. Ima Teacher is retiring with 28 years of service and three year final average salary (FAS) of $61,000. Based on the chart on page 17, we use the appropriate service credit rate per-centages based on Ms. Teacher‟s years of service.

Her first 10 years x 1.7% = 17.0% Next 10 years x 1.9% = 19.0% Next 8 years x 3% = 24.0% Total service credit rate = 60.0%

60% x $61,000 FAS (3 yr) = $36,600 annual benefit for life

(service credit rate %) x (3 Yr FAS) = (SRA Plan benefit)

= $3,050 monthly for life

SRA Plan example – Schedule B (vested after 7/1/05) and

eligible to retire at September 30, 2009

Mr. Stately Worker will retire with 15 years of service at age 66 and three year final average salary of $51,000. Based on the chart on page 17, we use the appropriate service credit rate percentages based on Mr. Worker‟s years of service.

His first 10 years x 1.6% = 16.0% Next 5 years x 1.8% = 9.0% Total service credit rate = 25.0%

25.0% x $51,000 FAS (3 yr) = $12,750 annual benefit for life

(service credit rate %) x (3yr FAS) = (SRA Plan benefit)

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ineligible to retire at September 30, 2009

Mr. ERSRI Member at age 61 will retire with 28 years of service and five year final average salary of $60,000. Since Mr. ERSRI Member was a Schedule A member who was ineligible to retire by September 30, 2009 (with 15 years of service and age 48), the law change (effective October 1, 2009) preserves all Schedule A service credit rates earned as of September 30, 2009. All future service credit rates earned after September 30, 2009 are at the Schedule B rates (see chart on page 17). Based on the example downward adjustment calculations on page 21, the new minimum retirement age for Mr. ERSRI Mem-ber would be age 60 years 10 months and 17 days; therefore, he is eligible to retire at that age or later. Mr. ERSRI Member decides to retire at age 61.

First 15 years of service earned as of September 30, 2009 is preserved at Schedule A service credit rates:

His first 10 years x 1.7% = 17.0% (Schedule A) His next 5 years x 1.9% = 9.5% (Schedule A)

Next 13 years of service earned after September 30, 2009 are based on Schedule B service credit rates:

Next 5 years x 1.8% = 9.0% (Schedule B) Next 5 years x 2.0% = 10.0% (Schedule B) Next 3 years x 2.25% = 6.75% (Schedule B) Total service credit rate = 52.25%

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SRA Plan example – Schedule B1 (vested after 7/1/05) and ineligible to retire at September 30, 2009 and new hires.

Ms. Stately Worker will retire with 14 years of service at age 65 and five year final average salary (FAS) of $51,000. Based on the chart on page 19, we use the appropriate service credit rate percentages based on Ms. Worker‟s years of service.

Her first 10 years x 1.6% = 16.0% Next 4 years x 1.8% = 7.2% Total service credit rate = 23.20%

= $986 monthly for life

Selection of the SRA Plan when you retire is final. You can-not change from the SRA Plan to any other pension pay-ment plan after retirepay-ment.

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Option #1/Joint and Survivor Full

Option #1 provides that upon your death, your beneficiary will re-ceive for his/her lifetime the same monthly retirement allowance as you received.

In order to finance this benefit, there will be an actuarial reduction in your benefit amount, which is determined by the age difference between you and your beneficiary. This means you will receive a lesser monthly benefit amount than under the SRA Plan during your lifetime; however, your pension will continue to be paid to your ben-eficiary after you die. Should you select Option #1, you are given the right to change your retirement option one time only provided the retiree and the beneficiary have not divorced, but you are una-ble to change to SRA Plus. Option #1 factors are located on page 37.

Option #1 example

Ms. Teacher is considering designating her husband as her benefi-ciary for Option #1, and her husband is five years older than she. Ms. Teacher‟s SRA Plan benefit, as determined in the first example on page 32, is $36,600.

To calculate, we use the Option #1 factor from the chart on page 37 for a beneficiary 5 years older = 86%, and Ms. Teacher‟s SRA Plan

(option factor) x (SRA Plan annual benefit) = (Option #1)

86% X $36,600 = $31,476 = Option #1 benefit and Survivor benefit = $2,623 monthly for life

Ms. Teacher will receive $31,476 annually or $2,623 monthly for life under Option #1. Upon her death, her spouse will also receive $31,476 annually or $2,623 monthly for life.

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Option #2/Joint and Survivor Half

Option #2 provides that upon your death, your beneficiary will receive for his/her lifetime a retirement allowance that is equal to

half the monthly retirement allowance that you received. With Option #2, there is a lesser actuarial reduction than under Option #1. Should you select Option #2, you are given the right to change your retirement option one time only provided the retiree and the beneficiary have not divorced, but you are unable to change to SRA Plus. Option #2 factors are located on page 37.

Option #2 example

Ms. Teacher is considering designating her husband as her benefi-ciary for Option #2, and her husband is five years older than she. Ms. Teacher‟s SRA Plan benefit, as determined in the example on page 32, is $36,600.

To calculate, we use the Option #2 factor from the chart on page 37 for a beneficiary 5 years older = 92%, and Ms. Teacher‟s SRA Plan

(option factor) x (SRA Plan annual benefit) = (Option #2)

92% X $36,600 = $33,672 Option #2 benefit for Ms. Teacher = $2,806 monthly for life

50% of $33,672 = $16,836 Option #2 survivor benefit (half) =$1,403 monthly for life

Ms. Teacher will receive $33,672 annually or $2,806 monthly for life under Option #2. Upon her death, her spouse will receive $16,836 annually (50%) or $1,403 monthly for life.

Note on Changing Option #1 and Option #2

If you select Option #1 or Option #2 at the time of retirement, you have the right to change your retirement option one time only to either Option #1, Option #2 or the SRA Plan, provided that you and your beneficiary, if married at the time of your retirement, have not divorced or are not involved in divorce proceedings. The one-time change is not individual to each option; for example, if you have Option #1 and change to Option #2, your right to change has been exhausted. You may not change from Option #1 or Option #2 to the SRA Plus payment plan.

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Beneficiary‟s Age Compared to Member‟s Age

Option #1 Option #2

Same Age 1 year younger 2 years younger 3 years younger 4 years younger 5 years younger 6 years younger 7 years younger 8 years younger 9 years younger 10 years younger 11 years younger

81% 80% 79% 78% 77% 76% 75% 74% 74% 73% 72% 71% 89% 89% 88% 88% 87% 86% 86% 85% 84% 84% 83% 83% Older Beneficiary Chart — Option #1 and Option #2

Option #1 Option #2

Same Age 1 year older 2 years older 3 years older 4 years older 5 years older 6 years older 7 years older 8 years older 9 years older 10 years older 11 years older

81% 82% 83% 84% 85% 86% 86% 87% 88% 89% 90% 91% 89% 90% 90% 91% 92% 92% 93% 93% 94% 94% 95% 95% Percentage of Benefit

Paid to Member

Percentage of Benefit Paid to Member Beneficiary‟s Age Compared

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SRA PLUS (Service Retirement Allowance Plus also known as the social security supplemental option is only available to Schedule A, Schedule AB, Correctional Officers vested on or before July 1, 2005, and Municipal retirees, excluding Police and Fire)

SRA PLUS uses a national average (an estimate of the amount of Social Security an average person would receive at the age of 62) to calculate a supplemental amount of retirement benefit you would receive from ERSRI prior to attaining age 62. The month following your 62nd birthday, your SRA Plus benefit will be reduced by the full national average; not just the supplemental amount. This option is not affiliated with the Feder-al SociFeder-al Security Administration. You will not be eligible to change your retirement option once you have chosen SRA Plus. The benefit stops up-on the death of retiree.

This option is not available to any Police and Fire members, those apply-ing for a Disability Retirement, MHRH Nurses, and any state employee, public school teacher, or correctional officer who has not completed at

least ten years of contributory service on or before July 1, 2005.

SRA PLUS example

Ms. Teacher is 58 at retirement and will turn 62 in 2013. Her pension benefit figured under the SRA Plan is $36,600. Using the chart on the next page, her age factor is 73%, and average Social Security esti-mate is $19,500. Here‟s how the SRA Plus is figured:

Age Factor 73% x $19,500 = $14,235 SRA Supplement

(age factor) x (Est. Social Security) = (SRA supplement)

SRA Plan annual benefit $36,600 Add SRA Supplement $14,235

SRA Plus benefit = $50,835 annually or $4,236 monthly, until age 62.

With 3% compounded COLA beginning 3rd January (2012)

$50,835 + $3,095 COLA = $53,930 annual benefit with COLA At age 62, subtract estimated Social Security of $19,500 from annual benefit with COLA by age 62

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· This option is not related to your participation in Social Security or any programs of the Social Security Administration (SSA). Regardless of what amount of benefits you might collect from the Social Security Administration and when you may collect them, your ERSRI or MERS benefit will reduce by the predetermined national average, beginning the month following your 62nd birthday.

· Estimates of Social Security benefits used by ERSRI to calculate adjust-ment of ERSRI pension benefits are general estimates and are not guaranteed by ERSRI nor the SSA.

· If you select SRA PLUS, you may not change your retirement option.

SRA PLUS Chart

Chart A Chart B

SRA Plus

Percentage Factors Est. Social Security Benefit at Age 62 Age at

Retirement Factor Year Turn Age 62 Amount 48 49 50 51 52 53 54 55 56 57 58 59 60 61 .38 .40 .42 .45 .48 .51 .55 .59 .63 .68 .73 .78 .85 .92 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 $15,000 $15,600 $16,300 $17,000 $17,800 $18,600 $19,500 $20,300 $21,200 $22,100 $22,800 $23,600 $24,300 $25,000

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Reduced Benefit Eligibility Early Retirement

–

Schedule B1 and Schedule B2 Only

Reduced Benefit Eligibility for Schedule B1 and Schedule B2 Retirees (those vested after 7/1/05) who were not eligible to retire at September 30, 2009.

State employees and public school teachers who are Schedule B1 or Schedule B2 members may retire at age 55 with 20 years of service credit, with a reduction in the benefit amount. The calcu-lated benefit payable at age 65 will be actuarially reduced ac-cording to the number of months the member is under age 65. See the chart below, and the examples provided, following.

Actuarial Early Retirement Factors

Age 64 63 62 61 60

Age Factor 89.3% 79.9% 71.6% 64.3% 57.9%

Age 59 58 57 56 55

Age Factor 52.2% 47.1% 42.5% 38.5% 34.9%

Early Reduced Retirement

For early reduced retirement, a member must have at least 20 years of service credit and be at least age 55. The member‟s regular benefit is calculated according to his or her years of service and final average salary (FAS). For Schedule B1 and Schedule B2, the FAS will be based on five highest consecutive

years of salary. The benefit amount is then multiplied by the

corresponding factor in the „Actuarial Early Retirement Fac-tors‟ chart above, according to the member‟s age. The younger the member, the greater the reduction of the benefit.

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• Reduced Benefit Example #1 - Retiring at age 55

Jane Lane leaves state service at age 55 with 21 years of service credit as she was not eligible to retire at September 30, 2009. If she waits until age 65 to collect her benefit, with a five year final aver-age salary (FAS) of $45,000 she will receive:

SRA Plan, 21 years service = Schedule B1 service cred-it factor of 36%

FAS (5 yr) = $45,000 x 36% = $16,200 annual benefit for life at age 65 (unreduced)

Because she is retiring under Schedule B1 (vested after 7/1/05), she has the option of taking an early reduced retirement beginning at age 55. Jane considers taking a reduced benefit at age 55. Using the „Actuarial Early Retirement Factors‟ chart on page 40, if Jane retires at age 55 she will receive 34.9% of the benefit she would be entitled to collect under Schedule B1 if she waited until age 65. Ap-plying the reduction factor for collecting the benefit at age 55, which is 34.9%, Jane would receive an annual benefit of:

$16,200 x 34.9% = $5,654 per year at age 55

(SRA Plan annual benefit) x (Early Retirement Factor) = (Early Retirement benefit)

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• Reduced Benefit Example #2 - Retiring at age 60

The reduction to her benefit if she collects it at age 55 is more than she anticipated, so Jane now considers working until age 60. In this example, Jane will work until age 60 and will have 26 years, and an increased salary. Increases in service credit and salary will subsequently increase her benefit.

Following are the calculations for Jane working until 60, earning 5 more years service credit and assuming 5 year FAS of $47,500 at that time:

SRA Plan, 26 years service = Schedule B1 service credit factor of 46.25%

FAS (5 yr) = $47,500 x 46.25% = $21,969 annual benefit for life at age 65 (unreduced)

Apply the reduction factor for collecting the benefit at age 60, which is 57.9%, Jane would receive an annual benefit of:

$21,969 x 57.9% = $12,720 per year at age 60

(SRA Plan benefit) x (Early Retirement Factor) = (Early Retirement benefit)

To Reduce or Not to Reduce - Your Choice

The early retirement option will not appeal to everyone, but it is an op-tion for those who end their employment prior to age 65 with at least 20 years of service. Alternately, full benefits are available at age 65 for those who wish to terminate service prior to age 65 and wait until age 65 to collect their benefit.