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Vermont State Teachers’

Retirement System

Retirement Issues Seminar

DEVELOPED AND PRESENTED BY Retirement Division

Vermont State Treasurer’s Office Elizabeth Pearce, State Treasurer

Nancy Dimick, Deputy Director of Retirement Services

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ELIGIBILITY FOR RETIREMENT

OLD GROUP C

25 years Service Credit on 6/30/10 or born before 7/1/53

Normal retirement at age 62 or with 30 years of service NEW GROUP C

Less than 25 years Service Credit on 6/30/10 and born after 7/1/1953

Normal retirement at age 65 or rule of “90”

EARLY RETIREMENT at age 55 with 5 years of service

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SUMMARY OF CHANGES - GROUP C

RETIREE HEALTHCARE

• For new hires and those with less than 10 years of service at June 30, 2010:

CHANGES EFFECTIVE JULY 1, 2010

1 to 14 years No subsidized coverage

15 years 60% single

20 years 70% single

25 years 80% single

• Current members with more than 10 years of service at June 30, 2010 eligible for 80% single coverage – same as previously provided

SPOUSAL COVERAGE

• Those with more than 30 years of service on June 30, 2010 will have to work another 5 years to be eligible for spousal coverage.

• Those with 25-29.99 years of service on June 30, 2010 will have to a total of 35 years.

• Those with 15 to 24.99 years of service on June 30, 2010 will have to work 10 more years.

• Those with 10 to 14.99 years of service on June 30, 2010 will be eligible upon 25 years of service.

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AVERAGE FINAL COMPENSATION (AFC)

GROUP C

• Average of the three highest consecutive

fiscal years’ salaries, regardless of when they occurred throughout your membership.

• Annual salary increases capped at 10% in

the years used to calculate AFC.

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SERVICE CREDIT CALCULATION

GROUP B

(All Group B members became Group C members as of 7/1/1990)

• Service credit before 06/30/1990

• Each year is calculated at 1.25% of AFC OLD GROUP C

• Service credit after 07/01/1990

• Each year is calculated at 1.67% of AFC to a combined maximum of 53.34%.

NEW GROUP C

• Service credit after 07/01/1990 calculated at 1.67% of AFC until reaching 20 years of service.

• Years over 20 after 07/01/10 calculated at 2% of AFC to a combined

maximum of 60%

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CALCULATING YOUR BENEFITS: GROUP C

NORMAL RETIREMENT (New Group C example)

• Group B: 0.0125 x 6 yrs x AFC ($60,000) = 7.5%

• Group C: 0.0167 x 20 yrs x AFC ($60,000) = 33.4%

• Group C: 0.02 x 4 yrs x AFC ($60,000) = 8.0%

Total percentage = 48.9%

Annually: $29,340.00 Monthly: $2,445.00

EARLY RETIREMENT

• New Group C- Calculate as above

• If Less than “Rule of 90” and under age 65, an actuarial penalty is applied.

• Penalty is applied based on your age in relation to 65, not on the “Rule of 90”.

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FULL-TIME/PART-TIME

FULL-TIME

• Teachers and administrators who work a minimum of 175 days in a contract or school year = 100% FTE

PART-TIME

• Days worked are fewer than 175.

• FTE determined by dividing days worked by 175

• Ex. 140 days / 175 = 0.80 FTE

• Retirement benefits for part-time teachers use full-time contract salaries to

calculate AFC

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SAMPLE ESTIMATE: GROUP C

Member age 61 Spouse age 59

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RETIREMENT OPTIONS

Maximum Benefit

Maximum benefit – no continued survivor benefit to your spouse of other beneficiary.

Guaranteed Return

Pension is slightly lower than maximum benefit. Return of unused balance of contributions, if any, to a beneficiary (lump sum payment).

50% Survivorship

Pension is reduced from maximum benefit (amount depends on the age of your survivor). Survivor receives ½ of your monthly payment for their lifetime after your death.

50% Pop-Up

Pension is slightly less than 50% survivorship, but if your survivor predeceases you, pension benefit increases to the maximum benefit. Survivor receives 1/2 of your monthly payment for their lifetime after your death

75% Survivorship

Pension is reduced from maximum benefit (amount depends on the age of your survivor). Survivor receives 3/4 of your monthly payment for their lifetime after your death.

75% Pop-Up

Pension is slightly less than 75% survivorship, but if your survivor predeceases you, pension benefit increases to the maximum benefit. Survivor receives 3/4 of your monthly payment for their lifetime after your death

100% Survivorship

Pension is reduced from maximum benefit (amount depends on the age of your survivor). Survivor receives an amount equal to yours for their lifetime after your death.

100% Pop-Up

Pension is slightly less than 100% survivorship, but if your survivor predeceases you, pension benefit increases to the maximum benefit. Survivor receives an amount equal to yours for their lifetime after your death

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SAMPLE ESTIMATE: GROUP C EARLY RETIREMENT

Member age 61 Spouse age 59

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PURCHASING SERVICE CREDIT

• Military service -Served at least 1 year of active duty prior to becoming a member of VSTRS (see pg. 16 for Military Grants)

• AmeriCorp/ VISTA

• Peace Corps

- Must have 15 years of VRS service

- May Purchase a Maximum of 5 years of:

- May Purchase a Maximum of 10 years of:

• Teaching: Public, Private, Parochial, Out- of-State

• State Government

• Municipal Service

- Must have 25 years of VRS service

- May Purchase a Maximum of 5 years of:

• “Air-Time”

- Restore Teaching In-State prior withdrawn membership

- Cost may be divided into a maximum of five

equal (interest-free) installments

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PURCHASING SERVICE CREDIT WORKSHEET

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SAMPLE ESTIMATE:

GROUP C WITH SERVICE CREDIT PURCHASE

Member age 61 Spouse age 59

PURCHASE PAYOFF TIME = 16 Months

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LEVEL INCOME OPTION

THIS OPTION IS ELECTED AT RETIREMENT FOR EMPLOYEES RETIRING BEFORE AGE 62

• Based on Social Security estimate of monthly benefits payable at age 62, with the

assumption that you do not have income from wages after your date of retirement, an additional payment is added to your monthly pension

• At age 62, the combined benefit is reduced by the full amount of the estimated Social Security payment provided at the time of your retirement

• Benefit reduction is ALWAYS at age 62, even if you do not collect Social Security at that time

• If Social Security Benefit is higher (or lower) at age 62, the change will not affect the amount your benefit is reduced

• Breakeven occurs between age 72 and 73

Reduced payment is for the lifetime of the retiree

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LEVEL INCOME EXAMPLE

NAME: I. M. Retiring AGE: 55

VSTRS: $2,463.00 per month

SOCIAL SECURITY ESTIMATED BENEFIT: $1,300.00 per month LEVEL INCOME BASED ON AGE: 56.99402% x $1,300.00 = $740.92 PENSION PAYMENT TO AGE 62: $3,203.92

PENSION PAYMENT FROM VSERS AT AGE 62 AND AFTER: $1,903.92 SOCIAL SECURITY PAYMENT: +/- $1,300.00

TOTAL LEVELED INCOME: $3,203.92 per month

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GRANT OF MILITARY SERVICE

• Must have 15 years of Vermont Retirement System Service Credit

Served at least 1 year of active duty prior to becoming a member of VSTRS

• During the conflict periods of:

• June 25, 1950 through January 31, 1955

• February 28, 1961 through August 4, 1964 (served in the Republic of Vietnam)

• August 5, 1964 through May 7, 1975

PROFESSIONAL STUDIES

- Service credit granted with documentation APPROVED LEAVE OF ABSENCE

- Taken after 07/01/1990

LEAVES OF ABSENCE

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DISABILITY RETIREMENT

• Eligible to apply after 5 years of service credit.

• Subject to approval by both Medical and Teacher Boards.

• Review process can take a minimum of 3 months.

• Can apply while still employed.

• Must apply within 90 days of separation of service.

• Minimum benefit equal to 25% of AFC.

• Call the retirement office for more information and applications.

• Annual verification of earned income required prior to achieving normal retirement age.

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DEATH-IN-SERVICE

REFUND/ “LUMP SUM”

• Lump sum contributions will be paid to the primary beneficiary(ies) if:

Age 55 or older with fewer than 5 years of service credit.

DEATH-IN-SERVICE BENEFIT –

must have Designation of Beneficiary form on file

• Eligibility:

• Age 55 with at least 5 years of service credit

• Any age with at least 10 years of service credit

• Benefit:

An automatic 100% survivorship benefit is paid only to the primary dependent designated beneficiary.

• Domestic partners are not recognized as dependents under this system.

If primary dependent designated beneficiary is a child, he or she must be able to be claimed as a dependent at the time of your death to receive a lifetime survivorship benefit.

PLEASE COMPLETE A BENEFICIARY FORM TODAY IF YOU ARE NOT SURE IF YOU HAVE ONE

ON FILE WITH OUR OFFICE

DEATH IN SERVICE CHILD/CHILDREN BENEFIT

• Must be an active employee (or on an

approved LOA) with a minimum of 1 year of service credit at time of death

• Up to 3 children may be eligible to receive a

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PENSION CHECK DEDUCTIONS

• Federal income tax

• State income tax

• Health Insurance

• Dental Insurance

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HEALTH AND DENTAL INSURANCE AFTER RETIREMENT

• Continued health insurance coverage through Blue Cross/Blue Shield.

• Can start insurance during any open enrollment period or when you lose other health insurance coverage at any time during the year.

• Retirees have a one-time option of paying a higher share of the health insurance premiums to provide partial health insurance premium coverage for a survivor, if a survivorship option is elected.

• Retirees have a one-time option for Dental Insurance coverage at 100% of premium cost.

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COST OF LIVING ADJUSTMENTS

ELIGIBILITY

• Normal Retirement

• First January following receipt of 12 pension checks

• Early Retirement (New Group C)

• First January after age 65

COLA

• Group C (Old & New)

• Half of the CPI

• Maximum COLA of 5% and minimum of 1% for each year

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APPLYING FOR BENEFITS

Benefits are not automatic - you must apply.

• Completed retirement application should be received in the VSTRS office no later than the last day of the month prior to your effective retirement date.

• Electronic Deposit of pension payments is required .

Elected option is irrevocable.

• You are encouraged to meet with a Retirement Specialist prior to retirement.

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EMPLOYMENT AFTER RETIREMENT

• Employment outside of teaching in a VT public school does not affect pension

• If employed as a teacher in a school that is under VSTRS

• Pension is frozen if you earn more than 60% of the current average salary of a teacher in Vermont and you must return all pension received that fiscal year.

• For school year 2021-2022, the maximum is

$39,200.

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MEMBER DIRECT

Did you know you can set up a Member Direct account and have the ability to log into your VSERS retirement account?

By signing up for Member Direct you can:

As an active employee:

- view your nominated beneficiary - create pension estimates

As a retiree:

- view and change Direct Deposit information

- view and change federal and state tax withholdings - change an address

- view and print monthly statements

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RETIREMENT OFFICE WEB PAGE

URL

• https://www.vermonttreasurer.gov/content/retirement/teacher

CURRENT PAGES INCLUDE

• Plan Description

• Comparison of Groups

• Board Agenda

• Board Minutes

• Newsletter

• Forms

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FOR MORE INFORMATION

Main Office: 802-828-2305 Toll Free: 1-800-642-3191

DAWN NEDDO

802-828-2108

Dawn.Neddo@Vermont.gov

LESTYN MATTISON

802-828-1465

Lestyn.Mattison@Vermont.gov

EMAIL: tre.retirementoffice@vermont.gov

References

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