Frequently Asked Questions - Retirement Age

FAQs – Retirement Age

Retirement Age for State Employees, Teachers and MERS General Employees

• For all members eligible to retire prior to July 1, 2012, their retirement age remains the same as previous law.
• For all new hires or members with less than five years of service on June 30, 2012, the new retirement age will match their Social Security retirement age.
• Members with five or more years of service on June 30, 2012, will be eligible to retire at their social security retirement age but will receive a proportional downward adjustment based on years of service prior to July 1, 2012, with a minimum retirement age of 59.
• Under the law enacted November 18, 2011, Social Security retirement age will never exceed age 67.
• A member of any age with ten or more years of service as of June 30, 2012 is eligible to retire at his or her retirement date under the current law with his or her benefit amount calculated using his or her accrued benefit as of June 30, 2012.  

Retirement Age for State Employees - BHDDH, Correctional Officers, Municipal Employees, Municipal Employees – Police & Fire, Judges, State Police

• For all members eligible to retire prior to July 1, 2012, their retirement age remains the same as previous law.
• For all members eligible to retire on or after July 1, 2012, see FAQs by Plan for your particular retirement age and retirement age transition rules under the law enacted November 18, 2011.

Transition Rules for Retirement Age for State Employees, Teachers and MERS General Employees:

The retirement system will calculate all transition rules for members and members may select the alternative that benefits them the most:

• Transitional Rule: Members with ten or more years of service may retire at their retirement age under the previous law and receive their accrued benefit as of June 30, 2012. Under this alternative, your benefit will be calculated based on your service and average compensation as of June 30, 2012. Members who choose this option will not receive any defined benefit accruals after June 30, 2012 but they will receive any defined contribution amounts accumulated after June 30, 2012.  This defined benefit pension will be paid without any actuarial reduction.
• Transitional Rule: Members who are within 5 years of their retirement age but have yet to reach full retirement age and have 20 or more years of service may retire at any time with an actuarially reduced benefit.

FAQs

Question: I am currently eligible to retire in March 2012. Under RIRSA, can I still retire in March?

Answer: Yes. Your retirement date will not change if you are currently eligible to retire prior to July 1, 2012.

Question: How will my retirement date be calculated under the proportionality rule?

Answer: The downward adjustment will be calculated using the following formula:

1. Subtract the member's projected retirement date under current law from his or her Social Security retirement date.
2. Calculate the member’s length of service as of June 30, 2012 (the numerator), and then calculate the member's total career projected service until his or her retirement age under current plan rules (the denominator). 
3. Multiply the fraction (numerator/denominator) in Step 2 by the time period calculated in Step 1, and this result is then subtracted from the member's Social Security retirement date to arrive at his or her retirement date.
4. If this calculation results in an age prior to age 59, then the member will be eligible to retire at age 59.

Question: I am a state employee currently eligible to retire in March of 2012. By June 30, 2012, I will have accrued a benefit of 56 percent of my final average salary. I plan to continue working for an additional 3 years. How will the new law affect me?

Answer: Because you are eligible to retire prior to July 1, 2012, your retirement date will not change.  In your case, you will be eligible to retire any time after March 2012.  The benefit you have accrued as of June 30, 2012 will be preserved and you will continue to accrue for years of service worked after July 1, 2012 at a 1 percent accrual rate.  If you work 3 additional years you will have accrued 59 percent of your final average salary.  This number is arrived at by taking your 56 percent (earned as of June 30, 2012) and adding 1 percent for each additional year of service after June 30, 2012.  In addition, you will receive any defined contribution benefits you will have earned after July 1, 2012. 

Question: I am a teacher and as of June 30, 2012, I will be age 44, with 15 years of service. Under the previous laws, my retirement date was age 60.79 or 60 years, 9 months old. What will be my new retirement age?

Answer: You will be eligible to retire at your social security retirement age, which is 67, but because you have at least 5 years of service as of June 30, 2012, your social security retirement age of 67 will be adjusted downward to age 64. The formula will work as follows:

1. Subtract the member's projected retirement date under previous law from his or her Social Security retirement date.
   
   In your case, this will be age 67 minus age 60 years and 9 months which equals 6 years and 3 months. 
   
   
2. 2. Calculate the member’s length of service as of June 30, 2012 (the numerator), and then calculate the member's total career projected service until his or her retirement age under previous plan rules (the denominator).
   
   In your case, this will be 15 years of service as of June 30, 2012 divided by 32 years of projected total career service which equals 0.4687. {The number “32 years” is arrived at by taking your current years of service (which is 15) and adding the numbers of years you would have to work until reaching your retirement age under current law (which is approximately 17 years).}
   
   
3. 3. Multiply the fraction (numerator/denominator) in Step 2 by the time period calculated in Step 1, and this result is then subtracted from the member's Social Security retirement date to arrive at his or her retirement date.
   
   In your case, this will be 0.4687 (the number arrived at in step 2) times 6 years 3 months (the number arrived at in step 1) which equals 2.93. Then take your social security retirement age, which is 67, and subtract 2.93. This equals 64.07. Therefore your new retirement age will be approximately age 64.   

Question: I am a teacher and as of June 30, 2012, I will be age 56, with 26 years of service and will have an accrued retirement allowance of 51.25 percent of my average salary. As of June 30, 2012, my current salary is $75,000 and my average salary is $72,000. Under the previous laws, my retirement date was approximately age 60, and under the proportionality rule of the law enacted november 18, 2011, I could retire at approximately age 61. However, I would still like to retire at age 60. What are my options under the law enacted November 18, 2011?

Answer:
                Option 1: Because you have at least 10 years of service as of June 30, 2012, you may retire at your previous retirement age of 60 and receive your accrued defined benefit as of June 30, 2012. In your case, that will be an annual benefit of 51.25 percent of $72,000 which is $36,900. In addition you will receive any amounts accumulated in your defined contribution account. By taking this option, you will not receive any additional accruals after July 1, 2012 nor will any increase in salary after July 1, 2012 be factored into calculating your final average salary. 
                Option 2:  Because you are within 5 years of your date of retirement as adjusted downward under the law enacted November 18, 2011, and you have at least 20 years of service, you will be entitled to retire at age 60 with an actuarially reduced retirement allowance. Under this option, your retirement allowance will be calculated by including accruals after July 1, 2012, and any salary increases after July 1, 2012 will be included in your calculation of final average salary. Under this option, your final average compensation, assuming a 2 percent annual increase in salary, will be approximately $76,000 and your accrued benefit will be 55.25 percent. This will result in an annual defined benefit of 55.25 percent of $76,000 or $41,990. Since you are receiving this benefit one year prior to your new retirement age, your benefit amount will be actuarially reduced to approximately $39, 500. In addition you will receive any defined contribution amounts accumulated in your defined contribution account.

The retirement system will calculate all your options and you will be able to choose the one that is most beneficial to you. In this case, option 2 would be most beneficial.