Pennsylvania Pension System Reform Benefit Examples

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Pennsylvania Pension System Reform Benefit Examples. Example of Changes to Current Employee. SERS member with 25 years of service as of effective date of change retires at age 60 with 30 years of total service. Final average salary equals $50,000 under current plan - PowerPoint PPT Presentation

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BUDGET DAY PENSION BRIEFINGTom Corbett, Governor ▪ Charles B. Zogby, Secretary of the Budget www.budget.state.pa.us

Pennsylvania Pension System Reform

Benefit Examples

BUDGET DAY PENSION BRIEFINGTom Corbett, Governor ▪ Charles B. Zogby, Secretary of the Budget www.budget.state.pa.us

2

Example of Changes to Current Employee

• Final average salary equals $50,000 under current plan• Final average salary equals $47,000 with reforms• Current Benefit equals 2.5% x $50,000 x 30 = $37,500

Proposed Benefit equals – 2.5% x $50,000 x 25 = $31,250 plus– 2.0% x $47,000 x 5 = $4,700 for total of $35,950

SERS member with 25 years of service as of effective date of change retires at age 60 with 30 years of total service

BUDGET DAY PENSION BRIEFINGTom Corbett, Governor ▪ Charles B. Zogby, Secretary of the Budget www.budget.state.pa.us

3

Example of Changes to Current Employee

• Contribution balance at retirement is $80,000

• Contribution balance at effective date is $54,000 and accrues to $65,700 at retirement– $65,700 attributable to service prior to the effective date– $14,300 attributable to service after the effective date

SERS member with 25 years of service as of effective date of change retires at age 60 with 30 years of total service

BUDGET DAY PENSION BRIEFINGTom Corbett, Governor ▪ Charles B. Zogby, Secretary of the Budget www.budget.state.pa.us

4

Example of Changes to Current Employee

• Current Actuarial Equivalent offset– Subsidized Portion: $80,000/14.29 = $5,600– Net Annuity: $37,500 - $5,600 = $31,900

• Proposed Actuarial Equivalent offset– Subsidized Portion: $65,700/14.29 = $4,600– Equivalent Portion: $14,300/10.42 = $1,400 for total $6,000– Net Annuity: $35,950 - $6,000 = $29,950 – Lump sum amount of $80,000 is unchanged

SERS member with 25 years of service as of effective date of change retires at age 60 with 30 years of total service

BUDGET DAY PENSION BRIEFINGTom Corbett, Governor ▪ Charles B. Zogby, Secretary of the Budget www.budget.state.pa.us

5

Example of Changes to Current Employee

• Final average salary equals $50,000 under current plan• Final average salary equals $47,000 with reforms• Current Benefit equals 2.5% x $50,000 x 30 = $37,500

Proposed Benefit equals – 2.5% x $50,000 x 20 = $25,000 plus– 2.0% x $47,000 x 10 = $9,400 for total of $34,400

SERS member with 20 years of service as of effective date of change retires at age 60 with 30 years of total service

BUDGET DAY PENSION BRIEFINGTom Corbett, Governor ▪ Charles B. Zogby, Secretary of the Budget www.budget.state.pa.us

6

Example of Changes to Current Employee

• Contribution balance at retirement is $80,000

• Contribution balance at effective date is $34,000 and accrues to $50,000 at retirement– $50,000 attributable to service prior to the effective date– $30,000 attributable to service after the effective date

SERS member with 20 years of service as of effective date of change retires at age 60 with 30 years of total service

BUDGET DAY PENSION BRIEFINGTom Corbett, Governor ▪ Charles B. Zogby, Secretary of the Budget www.budget.state.pa.us

7

Example of Changes to Current Employee

• Current Actuarial Equivalent offset– Subsidized Portion: $80,000/14.29 = $5,600– Net Annuity: $37,500 - $5,600 = $31,900

• Proposed Actuarial Equivalent offset– Subsidized Portion: $50,000/14.29 = $3,500– Equivalent Portion: $30,000/10.42 = $2,900 for total $6,400– Net Annuity: $34,400 - $6,400 = $28,000 – Lump sum amount of $80,000 is unchanged

SERS member with 20 years of service as of effective date of change retires at age 60 with 30 years of total service

BUDGET DAY PENSION BRIEFINGTom Corbett, Governor ▪ Charles B. Zogby, Secretary of the Budget www.budget.state.pa.us

8

Example of Changes to Current Employee

• Final average salary equals $50,000 under current plan• Final average salary equals $47,000 with reforms• Current Benefit equals 2.5% x $50,000 x 30 = $37,500

Proposed Benefit equals – 2.5% x $50,000 x 10 = $12,500 plus– 2.0% x $47,000 x 20 = $18,800 for total of $31,300

SERS member with 10 years of service as of effective date of change retires at age 60 with 30 years of total service

BUDGET DAY PENSION BRIEFINGTom Corbett, Governor ▪ Charles B. Zogby, Secretary of the Budget www.budget.state.pa.us

9

Example of Changes to Current Employee

• Contribution balance at retirement is $80,000

• Contribution balance at effective date is $10,000 and accrues to $22,000 at retirement– $22,000 attributable to service prior to the effective date– $58,000 attributable to service after the effective date

SERS member with 10 years of service as of effective date of change retires at age 60 with 30 years of total service

BUDGET DAY PENSION BRIEFINGTom Corbett, Governor ▪ Charles B. Zogby, Secretary of the Budget www.budget.state.pa.us

10

Example of Changes to Current Employee

• Current Actuarial Equivalent offset– Subsidized Portion: $80,000/14.29 = $5,600– Net Annuity: $37,500 - $5,600 = $31,900

• Proposed Actuarial Equivalent offset– Subsidized Portion: $22,000/14.29 = $1,500– Equivalent Portion: $58,000/10.42 = $5,600 for total $7,100– Net Annuity: $31,300 - $7,100 = $24,200 – Lump sum amount of $80,000 is unchanged

SERS member with 10 years of service as of effective date of change retires at age 60 with 30 years of total service

BUDGET DAY PENSION BRIEFINGTom Corbett, Governor ▪ Charles B. Zogby, Secretary of the Budget www.budget.state.pa.us

11

Example of Changes to Current Employee

• Final average salary equals $50,000 under current plan• Final average salary equals $47,000 with reforms• Current Benefit equals 2.5% x $50,000 x 30 = $37,500

Proposed Benefit equals – 2.5% x $50,000 x 5 = $6,250 plus– 2.0% x $47,000 x 25 = $23,500 for total of $29,750

SERS member with 5 years of service as of effective date of change retires at age 60 with 30 years of total service

BUDGET DAY PENSION BRIEFINGTom Corbett, Governor ▪ Charles B. Zogby, Secretary of the Budget www.budget.state.pa.us

12

Example of Changes to Current Employee

• Contribution balance at retirement is $80,000

• Contribution balance at effective date is $3,800 and accrues to $10,000 at retirement– $10,000 attributable to service prior to the effective date– $70,000 attributable to service after the effective date

SERS member with 5 years of service as of effective date of change retires at age 60 with 30 years of total service

BUDGET DAY PENSION BRIEFINGTom Corbett, Governor ▪ Charles B. Zogby, Secretary of the Budget www.budget.state.pa.us

13

Example of Changes to Current Employee

• Current Actuarial Equivalent offset– Subsidized Portion: $80,000/14.29 = $5,600– Net Annuity: $37,500 - $5,600 = $31,900

• Proposed Actuarial Equivalent offset– Subsidized Portion: $10,000/14.29 = $700– Equivalent Portion: $70,000/10.42 = $6,700 for total $7,400– Net Annuity: $29,750 - $7,400 = $22,350 – Lump sum amount of $80,000 is unchanged

SERS member with 5 years of service as of effective date of change retires at age 60 with 30 years of total service

BUDGET DAY PENSION BRIEFINGTom Corbett, Governor ▪ Charles B. Zogby, Secretary of the Budget www.budget.state.pa.us

14

Example of Changes to Current Employee

• Final average salary equals $75,000 under current plan• Final average salary equals $72,000 with reforms• Current Benefit equals 2.5% x $75,000 x 30 = $56,250

Proposed Benefit equals – 2.5% x $75,000 x 25 = $46,875 plus– 2.0% x $72,000 x 5 = $7,200 for total of $54,075

PSERS member with 25 years of service as of effective date of change retires at age 60 with 30 years of total service

BUDGET DAY PENSION BRIEFINGTom Corbett, Governor ▪ Charles B. Zogby, Secretary of the Budget www.budget.state.pa.us

15

Example of Changes to Current Employee

• Contribution balance at retirement is $160,000

• Contribution balance at effective date is $108,000 and accrues to $131,000 at retirement– $131,000 attributable to service prior to the effective date– $29,000 attributable to service after the effective date

PSERS member with 25 years of service as of effective date of change retires at age 60 with 30 years of total service

BUDGET DAY PENSION BRIEFINGTom Corbett, Governor ▪ Charles B. Zogby, Secretary of the Budget www.budget.state.pa.us

16

Example of Changes to Current Employee

• Current Actuarial Equivalent offset– Subsidized Portion: $160,000/15.67 = $10,200– Net Annuity: $56,250 - $10,200 = $46,050

• Proposed Actuarial Equivalent offset– Subsidized Portion: $131,000/15.67 = $8,400– Equivalent Portion: $29,000/11.13 = $2,600 for total $11,000– Net Annuity: $54,075 - $11,000 = $43,075 – Lump sum amount of $160,000 is unchanged

PSERS member with 25 years of service as of effective date of change retires at age 60 with 30 years of total service

BUDGET DAY PENSION BRIEFINGTom Corbett, Governor ▪ Charles B. Zogby, Secretary of the Budget www.budget.state.pa.us

17

Example of Changes to Current Employee

• Final average salary equals $75,000 under current plan• Final average salary equals $72,000 with reforms• Current Benefit equals 2.5% x $75,000 x 30 = $56,250

Proposed Benefit equals – 2.5% x $75,000 x 20 = $37,500 plus– 2.0% x $72,000 x 10 = $14,400 for total of $51,900

PSERS member with 20 years of service as of effective date of change retires at age 60 with 30 years of total service

BUDGET DAY PENSION BRIEFINGTom Corbett, Governor ▪ Charles B. Zogby, Secretary of the Budget www.budget.state.pa.us

18

Example of Changes to Current Employee

• Contribution balance at retirement is $160,000

• Contribution balance at effective date is $69,000 and accrues to $102,000 at retirement– $102,000 attributable to service prior to the effective date– $58,000 attributable to service after the effective date

PSERS member with 20 years of service as of effective date of change retires at age 60 with 30 years of total service

BUDGET DAY PENSION BRIEFINGTom Corbett, Governor ▪ Charles B. Zogby, Secretary of the Budget www.budget.state.pa.us

19

Example of Changes to Current Employee

• Current Actuarial Equivalent offset– Subsidized Portion: $160,000/15.67 = $10,200– Net Annuity: $56,250 - $10,200 = $46,050

• Proposed Actuarial Equivalent offset– Subsidized Portion: $102,000/15.67 = $6,500– Equivalent Portion: $58,000/11.13 = $5,200 for total $11,700– Net Annuity: $51,900 - $11,700 = $40,200 – Lump sum amount of $160,000 is unchanged

PSERS member with 20 years of service as of effective date of change retires at age 60 with 30 years of total service

BUDGET DAY PENSION BRIEFINGTom Corbett, Governor ▪ Charles B. Zogby, Secretary of the Budget www.budget.state.pa.us

20

Example of Changes to Current Employee

• Final average salary equals $75,000 under current plan• Final average salary equals $72,000 with reforms• Current Benefit equals 2.5% x $75,000 x 30 = $56,250

Proposed Benefit equals – 2.5% x $75,000 x 10 = $18,750 plus– 2.0% x $72,000 x 20 = $28,800 for total of $47,550

PSERS member with 10 years of service as of effective date of change retires at age 60 with 30 years of total service

BUDGET DAY PENSION BRIEFINGTom Corbett, Governor ▪ Charles B. Zogby, Secretary of the Budget www.budget.state.pa.us

21

Example of Changes to Current Employee

• Contribution balance at retirement is $160,000

• Contribution balance at effective date is $21,000 and accrues to $46,000 at retirement– $46,000 attributable to service prior to the effective date– $114,000 attributable to service after the effective date

PSERS member with 10 years of service as of effective date of change retires at age 60 with 30 years of total service

BUDGET DAY PENSION BRIEFINGTom Corbett, Governor ▪ Charles B. Zogby, Secretary of the Budget www.budget.state.pa.us

22

Example of Changes to Current Employee

• Current Actuarial Equivalent offset– Subsidized Portion: $160,000/15.67 = $10,200– Net Annuity: $56,250 - $10,200 = $46,050

• Proposed Actuarial Equivalent offset– Subsidized Portion: $46,000/15.67 = $2,900– Equivalent Portion: $114,000/11.13 = $10,300 for total $13,200– Net Annuity: $47,550 - $13,200 = $34,350 – Lump sum amount of $160,000 is unchanged

PSERS member with 10 years of service as of effective date of change retires at age 60 with 30 years of total service

BUDGET DAY PENSION BRIEFINGTom Corbett, Governor ▪ Charles B. Zogby, Secretary of the Budget www.budget.state.pa.us

23

Example of Changes to Current Employee

• Final average salary equals $75,000 under current plan• Final average salary equals $72,000 with reforms• Current Benefit equals 2.5% x $75,000 x 30 = $56,250

Proposed Benefit equals – 2.5% x $75,000 x 5 = $9,375 plus– 2.0% x $72,000 x 25 = $36,000 for total of $45,375

PSERS member with 5 years of service as of effective date of change retires at age 60 with 30 years of total service

BUDGET DAY PENSION BRIEFINGTom Corbett, Governor ▪ Charles B. Zogby, Secretary of the Budget www.budget.state.pa.us

24

Example of Changes to Current Employee

• Contribution balance at retirement is $160,000

• Contribution balance at effective date is $8,000 and accrues to $21,000 at retirement– $21,000 attributable to service prior to the effective date– $139,000 attributable to service after the effective date

PSERS member with 5 years of service as of effective date of change retires at age 60 with 30 years of total service

BUDGET DAY PENSION BRIEFINGTom Corbett, Governor ▪ Charles B. Zogby, Secretary of the Budget www.budget.state.pa.us

25

Example of Changes to Current Employee

• Current Actuarial Equivalent offset– Subsidized Portion: $160,000/15.67 = $10,200– Net Annuity: $56,250 - $10,200 = $46,050

• Proposed Actuarial Equivalent offset– Subsidized Portion: $21,000/15.67 = $1,300– Equivalent Portion: $139,000/11.13 = $12,500 for total $13,800– Net Annuity: $45,375 - $13,800 = $31,575 – Lump sum amount of $160,000 is unchanged

PSERS member with 5 years of service as of effective date of change retires at age 60 with 30 years of total service

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