VSERS Group C Plan Description
Table of Contents
If you are a State Police Officer or public safety employee assigned to law enforcement duties, a full-time firefighter employed by the State of Vermont, an employee of the department of liquor control who exercises law enforcement powers, an employee of the department of fish and wildlife assigned to law enforcement duties, a motor vehicle inspector, a full-time deputy sheriff employed by the State of Vermont, a full-time member of the capitol police force, or an investigator employed by the criminal division of the office of the attorney general, have attained full-time certification from the Vermont criminal justice training council, and are required to perform law enforcement duties as the primary function of your employment, and are subject to mandatory retirement permissible under 29 U.S.C. section 623(j), you are classified as a Group C member.
Group C members make annual contributions equal to 8.28% of pay into the trust fund, which is administered by the Board of Trustees. Earnings on trust fund investments provide a portion of your benefit, and the State of Vermont makes a contribution to pay the balance of your benefit.
You will receive retirement service credit for the full time that you are employed and are enrolled as an active member in the System. Each time you receive a paycheck you will be credited with one twenty-sixth of a year of credit. If you are off payroll for two paychecks, for example, you will receive credit for that year for .923077 years. If you work part-time and receive a check every two weeks, you will accrue credit at the full rate; your lower gross earnings for the year will be reflected in a lower retirement benefit. However, your two highest consecutive years will be used in the retirement calculation, regardless of when they occurred.
You are eligible to receive a normal retirement benefit when you reach age 55.
"Average compensable hours" shall mean average annual compensable hours for a period of five full years immediately preceding the years used to determine average final compensaion. If a member's compensable hours in any year used to calculate average final compenation exceeds 120 percent of average compensable hours, the compenation for hours worked in excess of 120 percent shall be excluded from average final compensation for that particular year. Average compensable hours form the benchmark to preclude abuses by implementing a 20-percent limit on increases in compensable hours in any year used to calculate average final compensation.
You are eligible for an early retirement benefit once you have reached age 50 with 20 years of service.
There are two forms of disability retirement: service-connected disability and ordinary disability. With a service-connected disability, there is no minimum service requirement; the Board of Trustees determines if you are disabled (as the result of an on-the-job injury) on the basis of medical evidence. For ordinary disability there are two requirements: the Board of Trustees must determine you are disabled on the basis of medical evidence, and you must have at least five years of service. You should contact the retirement office if you have any questions concerning disability benefits or the application process.
The amount of your pension benefit is determined by your Average Final Compensation (AFC), which is the average of your two highest consecutive years of earnings and your service at retirement or termination.
To calculate your annual normal retirement benefit, multiply your Group C service (up to 20 years) times .025 times your AFC. The maximum benefit allowed is 50% of AFC.
For example, if your two highest consecutive years of salary were $48,000 and $52,000, and you have 25 years of service under Group C, your maximum benefit would be calculated as:
.025 X 20* X $50,000
$25,000 annually or about $2,083 a month
*Reflects the maximum amount of applicable service.
This is your basic benefit and it is paid in full for your life with 70% automatically continuing to your spouse after your death.
If you are age 50 and have at least 20 years of service, you can take early retirement. Your benefit is calculated the same as a normal retirement benefit without reduction for early retirement. For instance, if you had an AFC of $48,000 and were age 52 at retirement with 25 years of Group C service, your benefit would be:
.025 X 20 X $48,000
$24,000 annually or about $2,000 a month.
Ordinary Disability Retirement
If you are unable to perform your duties because of a disability which is likely to be permanent, you may apply for an ordinary disability retirement benefit if you have five years of service. Your disability benefit is calculated the same way as a normal benefit, except there is a minimum benefit payable of 25% of your AFC.
You will receive an additional benefit equal to 10% of AFC for each dependent child (up to 3 children). The additional benefit is reduced by any Social Security benefit payable and is payable until the dependent reaches age 18, or age 23 if a dependent student.
Accidental Disability Retirement
If you are unable to perform your duties because of a disability which is the result of an accident that occurs during the performance of duty, there is no service requirement. Your accidental disability benefit equals 50% of your AFC. You will receive an additional benefit equal to 10% of AFC for each dependent child (up to 3 children). The additional benefit is payable until the dependent reaches age 18, or age 23 if a dependent student. These benefits are reduced by any Social Security benefit payable.
If you have five or more years of service and leave state employment before age 55, you are entitled to a vested retirement benefit, provided that you do not withdraw your contributions. Your vested retirement benefit is payable to you at normal retirement age, and is calculated in the same way as a normal retirement benefit (above). If you are much younger than age 55 and would rather have a return of your contributions plus accumulated interest, you may request a refund which cancels your retirement service credit and any right to future retirement benefits.
If you die as a member before termination or retirement and have 10 years of service or are age 55, a benefit is payable to your spouse or dependent children, or to your dependent parent, if you have no spouse or children.
Amount of Survivor Benefit
The benefit payable to your spouse is 70% of the benefit you would have received (without reduction) if you have retired on the date of your death. There is an additional benefit payable which is equal to 10% of AFC for each dependent child (up to 3 children). The additional benefit is payable until the child reaches age 18, or age 23 if a dependent student. These benefits are reduced by any Social Security benefit payable.
If your death is due to a work-related injury, there is no eligibility requirement and your spouse will receive a minimum benefit of 35% of your AFC, in addition to the dependent children's benefits.
If you have no spouse, benefits up to the amount that a spouse would have received will be divided among your dependent children and parents.
If you are do not meet the eligibility requirements for a survivor benefit or do not have a dependent beneficiary, the lump sum value of your contributions and interest will be paid to your designated beneficiary or your estate.
The basic benefit, is payable for your lifetime. Upon your death, your spouse will receive 70% of this basic benefit for life. At retirement you may choose to have a reduced benefit in order to provide additional income to your spouse or other beneficiary should you predecease your beneficiary. Besides the basic benefit, you have one other option from which to choose as outlined below.
In a contributory system, there will always be accumulated member contributions on your account. By taking Option 1, the guaranteed return, you receive a benefit slightly lower than the basic benefit, but the balance of your accumulated contributions at retirement, less the sum of annuity payments made to you, will be paid in a lump sum to your designated beneficiary. This option generally results in a payment if you die within thirteen or fourteen years after retirement.
Eliminated by the Legislature on July 1, 2009.
Retired Group C retirees receive cost-of-living adjustments only after they have received twelve checks. These adjustments are made each January to those members who have been retired for at least one calendar year, and are based upon the preceding June 30 Consumer Price Index (CPI) increase, with an annual ceiling of 5% and a minimum of 1%.
You may purchase retirement credit for a number of situations, including: service in the military, in the Peace Corps, or in VISTA; as an employee in another state or municipality; teaching; and with the State of Vermont for which you received no retirement credit.
While the Retirement Office can readily provide you with the actual cost to make the purchase, our experience has shown that acquiring the verification or documentation of prior service can be a lengthy process. To that end, we encourage all members who are interested in following through with a purchase to begin the verification process as soon as possible. Service credit documentation must be reviewed by our office and determined eligible prior to submitting payment. Under the law purchase payments must be completed within a five-year period prior to retirement in equal annual installments. Payments must also indicate whether they are being made on a pre-tax or post-tax basis.
You will need verification of prior service for any of the above categories indicating the years you worked, position held, whether you were full-time or part-time and whether you are eligible to receive a pension associated wit the service. Please complete the Application To Purchase Service Credit Form and return it to our office with the verification/documentation of your service. You will also need to indicate the number of years you are interested in purchasing and the timeframe for making the purchase. Upon receipt of this information we will issue a service purchase letter including the eligible years ot purchase, the purchase cost, and the timeframes associated with the purchase.
All of these purchase opportunities are cost neutral to the state. This means that you must pay the full cost of the added retirement benefit received. Total purchase for non-military service is limited to ten years' credit. Total military service cannot exceed three years, and there can be no parallel retirement rights in any other system for the credit you purchase. You should contact the retirement office for cost figures and return on investment information as well as the application procedure.
You may earn other income while you are receiving a retirement benefit, but you cannot work for the State of Vermont unless you are under contract or working as a temporary employee. (Retirement benefits for these two categories are excluded by law.) If you retire and return to work for the state as a classified or exempt employee, your retirement benefit will be frozen and your subsequent will be layered on top of you the previous "frozen" benefit. When you retire again, both the "frozen" and any new benefits will be paid. Any previous optional election will remain in effect for the frozen benefit; you can elect a new option for the additional benefit.
Retirement benefits are not automatic; you must apply for them.
At least nine months prior to the date on which you plan to retire you should contact the retirement office for an estimate and application materials as well as health insurance and tax forms.
Most of your benefit will be taxable, but an exclusion ratio will be calculated for you so that a specified amount of your benefit will be excluded from tax for a certain period of time, based on the total contributions you made prior to 3/26/98. Retirement benefits are paid monthly and will always be mailed to you on the last business day of the month, starting with the end of the month in which your retirement occurs. Your retirement date is normally the first day of the month following your last day at work.
Electronic banking is mandatory for all new retirements after January 1, 1999. A retiree shall have their monthly check electronically deposited to their checking or savings account. The pension is "in the retiree's account" on the last working day of each month. A monthly statement itemizing the current and year-to-date withholdings is mailed to each retiree only when a change occurs in the gross or net amounts. Credit union deductions can also be deducted from the monthly benefit.
Remember that we are here to help you plan your retirement, so feel free to request a retirement estimate a year or two in advance to assist you in your retirement planning.
Members who leave state employment and join either the Vermont State Teachers' Retirement System or the Vermont Municipal Employees Retirement System may transfer their retirement credit to either system within one year of their new employment, and vice versa, provided that they have not received a refund of contributions or received retirement benefit payments.
Group Health Insurance
One of the more attractive benefits of the Vermont State Retirement System is your ability to carry health insurance into retirement. The percentage of the premium you will pay is contingent on the number of years of creditable service you have at retirement. If you have 20 or more years, you will continue to pay 20% of the premium in retirement as you have as an active employee. You must be a covered employee at retirement, and may carry whatever coverage is in effect at that time for life.
As of July 1, 2007, members of the group C plan who separate from service prior to being eligible for retirement benefits under this chapter, who have at least 20 years of creditable service, and who participated in the group medical benefit plan at the time of separation from service, shall have a one-time option at the time retirement benefits commence to participate in the group medical benefit plan provided by the State of Vermont for active state employees. Premiums for the plan shall be prorated between the retired member and the retirement system pursuant to section 631 of this title.
There will be a double deduction for the medical premium from your first pension check, as our office needs to set the payments up in advance of the month during which the coverage occurs.
After you have retired and reached age 65, Medicare coverage is mandatory and the cost is shared with the plan, so the plan premium drops; Medicare becomes the primary insurer. You must remember to enroll for both Part A and Part B of Medicare as soon as eligible. It is important to recognize that if you have two-person or family coverage, that coverage ceases at your death, unless you have chosen a survivorship option to allow for the monthly premium deduction from the beneficiary's retirement check. In this instance, the surviving beneficiary must pay the full premium cost of the health insurance. The Premium Reduction Option (PRO) gives members the option at retirement of paying a higher premium in order to provide a partial premium for their surviving dependent, if they elect a survivorship option at retirement.
At the date of retirement members are given a one time option to choose Dental Insurance at the full premium cost to the member provided they have the state dental coverage at retirement. The state does not contribute any portion of this premium. There will be a double deduction for the dental premium from your first pension check, as our office needs to set the payments up in advance of the month during which the coverage occurs.
If you are covered by life insurance and have at least 20 years of creditable service and retire with no break between termination and retirement, you are covered by a $10,000 life insurance policy at no cost. In addition, you may convert your present insurance coverage to an individual policy without a physical examination.
Some retirement systems are integrated with Social Security, and the amount of one's retirement check depends upon the benefit from the federal government. Vermont's Retirement System has no effect upon Social Security and vice versa; the two supplement one another. Remember that you have to apply for both benefits, since neither is automatic.
Full Social Security is paid at ages 65 to 67, depending on your year of birth. Employees born in 1937 or earlier are entitled to full benefits at age 65; employees born in 1960 or later will be entitled to full benefits at age 67. The full benefit age gradually increases from age 65 to 67 for those born between 1938 to 1959.
Benefits can begin as early as age 62 with a 20% to 30% reduction, depending on your year of birth. The reduction is 20% for employees born in 1937 or earlier.
Deferred compensation is a tax-sheltered vehicle which allows you to increase income at retirement. The Internal Revenue Service establishes the maximum amount that may be contributed each year. The balance in your Deferred Compensation account is payable upon termination of employment or retirement, regardless of your age. Payment options are explained in more detail in the Deferred Compensation Plan booklet or at their website. Additional detailed information may be found at the Great West website (the deferred compensation third-party administrator for the State of Vermont) or more on this web site at Deferred Compensation.
If you still have questions regarding your retirement account or other matters about retirement, please do not hesitate to contact the Retirement Office at 1-800-642-3191 (toll free within VT only) or (802) 828-2305. The staff is always happy to answer your questions and assist in your retirement planning.