As a SERS member, you will have a decision to make in early 2019.
With a few exceptions, if you are working and contributing toward a SERS pension, you will have the choice to continue to earn your SERS pension as you do now or to switch to one of the three new retirement benefit options between Jan. 1, and March 31, 2019.
Your choice is final and binding, including if you leave state employment and later return to work for a SERS-participating employer. As a result, it is important that you consider your options carefully.
You are a member of the SERS defined benefit pension plan. In this plan, the amount of your SERS pension is defined by a calculation that takes into consideration your years of service and salary. The amount grows each year based on an annual benefit accrual rate and, when you retire, is paid to you in equal monthly pension payments for your lifetime.
If you have five or more years of service credit, your SERS pension also includes a disability retirement benefit that would provide monthly pension payments if you become unable to perform your job because of injury or illness. For employees under the governor’s jurisdiction and most independent employers, the benefit also includes majority state-paid retiree health insurance for the term of your disability retirement benefit.
Act 2017-5 created three new options: one straight defined contribution plan or investment plan option; and two “hybrid” plan options. The hybrid plans are a blend of a defined benefit pension plan and a defined contribution investment plan.
Similar to a private sector 401(k) plan, the amount of money you have for retirement will be based largely on the amount of money you invest, your personal investment choices, and the markets. This option does NOT include a SERS disability retirement benefit. However, agencies under the governor’s jurisdiction will offer majority state-paid health coverage to employees who become disabled and meet eligibility requirements.
The pension portion of both of these options features a lower annual benefit accrual rate than you currently have and your final average salary will be based on a five-year average (by highest calendar year) rather than a three-year average (by highest calendar quarters). In addition, your benefit will be reduced for early retirement if you retire before age 67, which is older than the requirement of your current plan.
While both hybrid plans include a disability retirement benefit, the amount will be smaller than that provided by your current plan. Both plans include majority state-paid health coverage for the term of your disability retirement benefit.
Hybrid Class A-5 – You would contribute the same amount you currently do toward your retirement benefit; however, it would be split between the pension and defined contribution plans. The pension portion of your benefit would be guaranteed to grow by 1.25% of your pay for each year you work for a SERS-participating employer.
Hybrid Class A-6 – You would contribute the same amount you currently do toward your retirement benefit, which would be split between the pension and defined contribution plans. The pension portion of your benefit would be guaranteed to grow by 1% of your pay for each year you work for a SERS-participating employer.
No matter which plan you choose, the percentage of your compensation withheld from your pay as your contribution toward your retirement benefit will not change.
As with your current plan, there are no provisions for emergency withdrawals – generally speaking, the only way to receive money from your retirement benefit is to retire.
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If you choose to continue earning your SERS pension as you do today, you have nothing more to do. If you do nothing, you automatically will remain in your current plan.
If you choose to switch to one of the optional plans, you can request an official plan election form between Jan. 2 and March 29, 2019, by contacting a SERS counselor at 1.800.633.5461. The new plan will become effective on July 1, 2019.