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Welcome!

Virginia Retirement System

Chesterfield County Public Schools

VRS Retirement Benefits

February 2014

Service Retirement Basics

VRS Defined Benefit Plan

• Guaranteed

• The benefit is:

• Not based on contributions

• Based on a formula


Average final compensation Years of service Age at retirement

VRS Benefit Formula

Three factors are used to calculate your retirement benefit:

A reduction is applied to the benefit if you retire before you qualify for an unreduced benefit


VRS Retirement Requirements

Plan 1, members prior to 7/1/2010

Age 50 + 30 years of service




Reduced Benefit: Unreduced Benefit:

Advance Pension Option

Partial Lump-Sum Option Payment (PLOP)

Survivor Option

Basic Benefit

Retirement Payout Choices


Estimating Your Retirement Benefit

Quick and Easy calculator

Use the Service Retirement Calculator or myVRS

www.varetire.org

Member log-in

Experiment with various retirement strategies

http://www.varetire.org/

New to myVRS? Answer a few simple questions, then create your username and password to begin.

Estimating Your Retirement Benefit

– View your member information

– Check the status of applications

– Estimate your retirement benefit

– View and update personal contact information

– Estimate your monthly retirement income using the myVRS Retirement Planner

myVRS

• Things to consider while employed…..

Other Benefit Considerations

• Benefit is paid to your beneficiary

• Benefit is paid monthly or in a lump-sum

Death-in-Service Benefits

If you die while employed in a VRS-covered position:

Increasing Your Retirement Benefits

• Purchase prior service credit to increase your VRS benefit (must be eligible)

and/or • Contribute to other retirement saving plans….

– Voluntary Tax-deferred annuity offered by your employer (403-b or 457 plan)

– See your financial institution for other options.

Increasing Retirement Income


• You are an active member

• The service is certified by the agency that employed you at the time

• You are not already receiving a benefit for that service

Purchasing Prior Service Credit

You are eligible to purchase prior service credit if:


• VRS refunded service

• Leave of absence for military service (no cost)

• Leave of absence for birth/adoption or educational

• Prior service not reported to VRS (FT or PT)

Purchasing Prior Service Credit

For more information on other types of purchasable service, cost and required forms visit the VRS Website at www.varetire.org

Types of service that can be purchased:

http://www.varetire.org/

• Things to consider at retirement….

Applying for Retirement Benefits

Apply three to six months before the date you want to retire

The booklet is available from your Benefits Department

Obtain the Applying for Service Retirement booklet


• Important documents you need to provide:

– Legible copy of your birth certificate

– Legible copy of your survivor’s birth certificate for the survivor option


• Your retirement application is received at VRS at least 60 days prior to your retirement date

• Your first monthly benefit payment will generally be paid on the first of the month following the month of your retirement

IF

Monthly Benefit Payment

Life Insurance Benefits

• Before retirement:

• Natural death benefit

• Accidental death benefit

• Accelerated death benefit

Basic Group Life Insurance


• After retirement: – Natural death benefit and accelerated death

benefit continue

– Life insurance continues and begins to reduce after retirement

– All coverage continues at no cost to you

Basic Group Life Insurance


• Before retirement: You may be eligible to purchase optional life

insurance

Optional Life Insurance


To continue Optional Life Insurance after retirement:

You must carry the coverage for the 5 years prior to retirement

You must elect the coverage within 31 days of retirement



Your optional life insurance coverage ends at age 80

Your optional life insurance coverage begins to reduce when you reach age 65

Reductions after retirement:



• Address: Minnesota Life P.O. Box 1193 Richmond, VA 23218-1193

• Phone: (800) 441-2258 (toll free)

Life Insurance

Your Beneficiary Information

•Designate your beneficiary or follow the Order of Precedence:

• Spouse

• Child(ren) and descendants of deceased children

• Parent(s)

• Executor or Administrator of the Estate

• Next of kin under laws of state where member resided at time of death

The Designation of Beneficiary (VRS-2) is located on the VRS Web site

Beneficiaries

Health Insurance Credit

What is the health insurance credit?

• Helps to defray the cost of your health insurance premium

• Is a non-taxable benefit • Is applied only to the portion of the premium that covers the retiree

Health Insurance Credit

Eligibility:

• You must have 15 years of service to be eligible • You must pay a monthly premium for your

individual health insurance coverage Professional: $4.00 / year of service, no cap To apply for the credit:

• Complete the Request for Health Insurance Credit (VRS-45). The form is located on the VRS Web site

Working After Retirement

What happens to my retirement benefit if I return to work?

Benefits stop if… Benefits continue if …

Your benefit will be recalculated when you

retire again

A bona fide break in service is required if returning to the same

employer

Working in a non VRS covered position

Returning to a VRS-covered position

SUPPLEMENTAL

RETIREMENT PROGRAM

Supplemental Retirement Program

• A retention incentive plan designed to provide a supplemental retirement income for a long-term employee.

• Allows an employee to be employed on a temporary, part-time basis in the same or equivalent assignment for the required period.

Supplemental Retirement Program

(SRP) Eligibility Requirements

• Retire from a full-time VRS covered position with CCPS effective July 1 prior to working the SRP

• Have at least 10 years of employment by CCPS, including the 5 years immediately preceding retirement

• Have at least 20 years in VRS or related experience as granted by CCPS at the time of hire

• Not be eligible for Disability Retirement

SRP Work Requirements

• Typically work in same job • Must have a 30 day break in contract

– 10 month employees – September – 11 month employees – August – 12 month employees – July

• No overtime, non-contractual assignments or supplements allowed as of July 1 retirement date

SRP Payout Information

• Formula = 175% of the final salary divided by the number of years chosen to receive the SRP benefit – minimum of 5 years

• Payment is made semi-monthly according to the CCPS payroll schedule during the first year, and monthly from a trust fund for the remaining payout period

• IMPORTANT: If you do not reach age 55 by December 31st of the year in which you retire the IRS will impose a 10% penalty until you reach age 59 ½

RETIREE HEALTH BENEFITS

Retiree Health Benefits

• Those employed prior to 7/1/06 who reach a combination of age and service equal to or exceeding 60 years as of 7/1/07, including 10 years of service with CCPS, are eligible to continue medical and dental coverage as a retiree

• The School Board will contribute the same amount for retiree-only coverage as it does for employee- only coverage until the retiree reaches age 65

Retiree Health Benefits • Those employed prior to 7/1/06 who do not reach a

combination of age and service equal to or exceeding 60 years as of 7/1/07, including 10 years of service with CCPS, are eligible to continue medical and dental coverage as a retiree

• Upon retirement at a minimum of age 55 and 15 years of CCPS service, school contribution will be as follows:

15-19 years: $150.00/month* 20-24 years: $225.00/month* 25+ years: $300.00/month*

*increased up to 3% per year until age 65, based on inflation

Retiree Health Benefits

• Employees hired on or after July 1, 2006 who retire at age 55 with 15 or more years of service will be able to purchase retiree health benefits at the School System’s group rate but will not receive a contribution toward the cost

Retiree Changes when age 65 (effective 1/1/09)

• For all employees who met the grandfathered rules that

took effective 7/1/07 and have at least 30 years in the VRS by 1/1/09 • $179 with 3% annual increase to a medical plan

• For all other employees who met the grandfathered rules

that took effect 7/1/07 but do not have at least 30 years of service in VRS by 1/1/09 • $4 per year of CCPS service when retired and age 65 or • $2 per year of CCPS service for retirees at age 65 who qualify

for the $4 per year of service state health credit

Additional Contribution Toward Retiree Health Care

• School Board will continue to contribute $40 to the prescription drug plan Part D in addition to the $4 or $2 contribution per month

• School Board will continue to contribute to

dental coverage in addition to the $4 or $2 contribution per month

Leave Payout at Retirement

• Unused Personal or Vacation Leave hours are paid at the employees hourly rate of pay.

• Unused Sick Leave days are paid based

on years of consecutive experience at CCPS.

• Must have been employed at least 5 years

Leave Payout at Retirement • 5-14 years of consecutive CCPS employment prior to

retirement, payment will be made at $30 per day, not to exceed a maximum payment of $4,000

• 15-24 years of consecutive CCPS employment prior to retirement, payment will be made at $30 per day, no max

• 25-29 years of consecutive CCPS employment prior to retirement, payment will be made at $40 per day, no max

• 30+ years of consecutive CCPS employment prior to retirement, payment will be made at $50 per day, no max

HOW TO APPLY FOR RETIREMENT

Contact the Benefits Department to request a Retirement Packet:

Beverly Ezell 717-6758 [email protected] Bobbie Ivey 751-4997 [email protected]

For Additional Questions

Contact the Benefits Department at: 748-1226 or by email: [email protected]

Additional Information is on the Benefits page of the CCPS portal:

https://ccpsportal.ccpsnet.net

mailto:[email protected]

Retirement Planning Consultations offered by VALIC

• List of VALIC Financial Advisors is online at www.valic.com/chesterfieldcps and on the Benefits page of the CCPS portal at https://ccpsportal.ccpsnet.net

• VALIC Retirement Planning Seminars coming

soon. Watch for emails to come.

http://www.valic.com/chesterfieldcps

https://ccpsportal.ccpsnet.net/

The following slides are presented by VALIC

Social Security

• The basics – It is insurance, not charity or savings – Eligibility

• 40 quarters of working service

• Depending on birth year, full retirement age varies from 65 to 67 Year of Birth Full Retirement Age (FRA)

1937 or earlier 65

1938 - 1942 65 + 2 months per year after 1937 until 1943

1943 - 1954 66

1955 - 1959 66 + 2 months per year after 1954 until 1960

1960 and later 67

Social Security benefits

Average annual Social Security benefits

Source: SocialSecurity.gov. The 2012 Annual Report of The Board of Trustees of the Federal Old-age And Survivors Insurance and Federal Disability Insurance Trust Funds.

$19,350

$43,000

$68,800

$101,320

$10,648

$17,534

$23,255

$27,762

Low-earner

Mid-earner

High-earner

Maximum-earner

$17,122

Annual earnings vs. benefits for workers retiring at age 65

Past earnings Benefits



Estimating your benefits Access the Social Security online calculator

www.ssa.gov/estimator

Source: SocialSecurity.gov.

When to start taking benefits?

There’s no “one size fits all” … it depends on your circumstances Your current cash needs

Your health and family longevity

Whether you plan to work in retirement

Your other sources of retirement income

Your anticipated future financial needs and obligations

The amount of your future Social Security benefit


Collect early (age 62 - FRA)

1

Options for collecting benefits

Collect at FRA (65 – 67)

2

Collect after FRA (FRA – 70)

3

The options for collecting are not intended to encourage a particular choice. Analyze your individual situation and seek guidance from a financial advisor.


1. Collect early

> Illness or unemployment

> You expect to have a short life expectancy

> You need the money immediately to make ends meet

> Money is not a concern and you just prefer to stop working

Reasons

> You would collect income over a longer period of time (assuming a long life expectancy)

Pros

> Your monthly Social Security benefit amount would decrease

> You would forego income and savings opportunities

> Employer pension plan or DBP benefits are reduced

Cons



1. Collect early Social Security benefits will be reduced by as much as 30%

*Percentages are approximate due to rounding. Source: Retirement Planner: Benefits By Year Of Birth. Social Security Administration. SocialSecurity.gov.

Year of Birth Full Retirement Age If collected at age 62, your $1,000 benefit will be reduced to:

That’s a percentage decline

of:

1943 – 1954 66 $750 -25% 1955 66 and 2 months $741 -26% 1956 66 and 4 months $733 -27% 1957 66 and 6 months $725 -27% 1958 66 and 8 months $716 -28% 1959 66 and 10 months $708 -29% 1960 and later 67 $700 -30%


2. Collect at Full Retirement Age (FRA)

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> You can make ends meet without Social Security income

> You are in good health and expect to live long past your FRA

Reasons > You receive 100% of

your Social Security benefits

> You add more earnings to your work record

Pros


Source: Social Security Administration; ssa.gov.

3. Collect after Full Retirement Age (FRA)

> You can make ends meet without Social Security income

> You are in good health and expect to live long past your FRA

Reasons > Your benefit payments

would increase by up to 8% a year – The yearly rate of

increase depends on your year of birth

– Increases end after you reach age 70, even if you continue to delay taking benefits

Pros

This Delayed Retirement Credit (DRC) is in addition to the Cost of Living Adjustment.

Year of Birth Yearly Rate of Increase

1935-1936 +6.0% 1937-1938 +6.5% 1939-1940 +7.0% 1941-1942 +7.5% 1943 or later +8.0%



3. Collect after Full Retirement Age (FRA)

•Finding the break-even point Longevity plays a key role in determining which option is best


This is a hypothetical example that assumes a monthly benefit of $2,400 at FRA.

Age Begin at Age 62 Begin at FRA of 66 Begin at Age 70

62 $21,600 $0 $0

67 $129,600 $57,600 $0

70 $194,400 $144,000 $38,016

75 $302,400 $288,000 $228,096

78 $367,200 $374,400 $342,144 80 $410,400 $432,000 $380,160

82 $453,600 $489,600 $494,208

◄ Breakeven

◄ Breakeven

This breakeven point analysis is not intended to encourage early claims. Analyze your individual situation and seek guidance from a financial advisor.


Single filer Qualifies for social security benefits solely based on work history Life expectancy is the best strategy for determining when to file

Female Male

Average life expectancy

Files at age 62

Files at age 70

Average life expectancy

Files at age 62

Files at age 70

79 $113,352 $105,618 76 $ 98,423 $ 74,239

84 $134,305 $150,421 81 $122,295 $124,612

89 $150,911 $186,906 86 $141,434 $165,950

This is a hypothetical example that shows how a three-year difference in life expectancies between men and women changes the overall strategy for filing. It assumes a monthly benefit of $1,000 at FRA.

Source: cbsnews.com. How Single Filers Can Get the Most from Social Security, August 2010.

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Spousal benefits Spouse can claim the greater of his/her own benefit or

50% of their spouse’s benefit at FRA Spouse cannot collect on spouse’s record until the primary

files for benefits (the primary can file and elect to suspend benefits)

Spousal benefit is reduced up to 35% if claimed prior to the recipient’s FRA

A divorced spouse can apply for benefits on a worker's record if he/she:

• Was married to worker for at least 10 years • Divorced for at least two years • Is at least age 62 • Is unmarried • Is not eligible for equal or higher benefits on his/her own or

someone else's record

Source: Social Security Administration. SSA.gov., 2013.

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Bridging the income gap

Working in retirement You can still receive Social Security benefits

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When you are … You can earn up to …* After which you’ll lose …

Pre FRA $15,120 $1 for every $2 you earn over limit

Reach full retirement age $40,080 $1 for every $3 you earn over limit

Older than FRA No limit No penalty

*Data is for 2013.

Action Steps

Action steps

1 Consider your retirement expectations

2 Assess your financial situation

3 Work with a financial advisor

Action steps

Consider your expectations for retirement Will you continue to work? How is your health? Is there a history/expectation of longevity? If you are married, what is the age difference between you and

your spouse? Whose benefits will your spouse collect?

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S A V I N G : I N V E S T I N G : P L A N N I N G

Action steps

Assess your financial situation •Some of the benefits of financial planning are:

Identifies the five major risks in retirement Provides a big picture view of your

current financial situation Helps identify your financial goals and objectives Allows you to understand the impact of your

decisions Offers you a course of action needed

to achieve your financial goals Ensures your goals stay on track, if reviewed

regularly Assists in identifying income gaps

S A V I N G : I N V E S T I N G : P L A N N I N G

Action steps

Consider working with a VALIC financial advisor A financial advisor can help

you: – Prioritize your investment goals – Determine the time horizon needed to

achieve your goals – Determine a financial strategy to meet

your goals

For more than half a century VALIC has helped Americans plan for and enjoy a secure retirement.

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Documents

Welcome! [mychesterfieldschools.com]mychesterfieldschools.com/wp-content/uploads/hr...Welcome! Virginia Retirement System Chesterfield County Public Schools . ... retiree • Upon