VSERS Group F Plan Description

Table of Contents

Topics

Introduction 

The Vermont State Employees' Retirement System for Group F members forms a solid foundation for your retirement income. Together with your personal savings and Social Security, you can look to your benefits from the System to help you plan for a secure and comfortable retirement.

Management of the System 

The general administration and responsibility for formulating administrative policy and procedures of the retirement System for its members and their beneficiaries is vested in the Board of Trustees consisting of eight members. They are the State Treasurer, the Governor's representative, the Commissioner of Personnel, the Commissioner of Finance and Administration, three members elected by the VSEA to represent active employees, and one elected by the Retired Chapter of VSEA.

The Board appoints an executive secretary that acts as executive officer for the Board. The administrative functions of the VSERS are managed by the Director of Retirement Operations and carried out by the staff. Board meetings are open to the public and members are welcome to attend at any time. Administrative appeals or other claims should be addressed to the Board for action at its next meeting. The Board generally meets once a month.

Type of Plan and Contributions 

VSERS is a public employee pension plan and trust qualified as a tax-exempt organization under Sections 401(a) if the Internal Revenue Code (IRC). It is a contributory, defined benefit plan to which its participating members make regular contributions to a trust fund and the State of Vermont deposits an annual appropriation (contribution) based on a recommendation resulting from an actuarial assumption of liabilities.

Group F members make annual pre-tax contributions equal to 6.40% of pay into the trust fund. Earnings on the trust fund investments provide a portion of your benefit, along with the State of Vermont's contribution.

With a defined benefit plan a participant's actual retirement benefit is specifically determined by a formula, which contains three variables; the participant's service credit, the participants age at retirement, and their average final compensation. The final benefit is not dependent on the amount of contributions made to the plan.

Vesting and Membership in the System 

If you were employed by the State of Vermont or participating entity on or after January 1, 1991, you are automatically a Group F member. If you were hired before January 1, 1991 and were a group E member in service on January 1, 1991, you are now a Group F member. Members who are not Group F members are those who elected to remain Group A, State Police and law enforcement positions (Group C), and Judges (Group D). The only state employees who are not members of the System are exempt employees who elect to belong to the defined contribution plan or those specifically excluded by law such as temporary employees and those engaged under retainer or special agreement.

You will be vested in the VSERS upon the attainment of five (5) years of creditable service.

Enrollment 

Enrollment is mandatory and you must be enrolled in the VSERS as soon as you meet the eligibility requirements, previously described, regardless of any probationary period your employer may have. The department of personnel, payroll unit, will notify the system of your employment with their bi-weekly wage report. You will be sent notification of your enrollment and a designation of beneficiary form, and asked to submit the beneficiary form to the VSERS as soon as possible.

Beneficiary Designation 

A beneficiary(ies) is the person(s) to whom you want your accumulated contributions plus interest to be refunded and/or any available death benefits to be paid to if you die before retirement. However, a death-in-service benefit is only payable to your designated dependent beneficiary.

You may choose any person or your estate, as your beneficiary and you may change your designation at anytime by filing the appropriate form with the VSERS. All designation of beneficiary forms must be notarized.

If you do not complete a beneficiary designation form, any return of contributions or benefits payable in the event of your death will be payable according to applicable Vermont law.

Annual Statement of Benefits 

Each Fall, a computer printed statement is mailed to active members of the system. These statements should be checked over carefully to verify if we have accurate information on the member's account, i.e., date of membership, beneficiary, address, etc. The statement date is as of June 30 of the year sent. The first annual statement would be mailed to a new member in the fall after completion of a full fiscal year of earnings (July 1 - June 30).

The first paragraph explains what a member would receive if they continue working to normal retirement age. The second paragraph explains what a member has earned to date and what a member would receive if they were to terminate their job immediately The statement is calculated based on current salary. All the figures are annual amounts. The third paragraph shows what the member's contributions are to date and the interest that has accrued. This paragraph also shows who is designated as primary beneficiary: if a beneficiary isn't named, ESTATE will appear. If a member has questions regarding the annual statement, they should call our office. It is also very important that addresses are kept up-to-date with the office so that this and other mailings will reach all members.

Separation of Service 

If you leave State service before you have acquired five consecutive years of creditable service, and withdraw your accumulated contributions, your service credits will be cancelled. You may leave your contributions in your account for up to three (3) consecutive years before the VSERS will automatically withdraw your membership and refund your contribution.

If you separate from service after you have accumulated five or more consecutive years of creditable service, and withdraw your accumulated contributions, your service credits will be cancelled. You may leave your contributions in your account for up to three (3) years before the VSERS will automatically put your account in a vested deferred status, if you have not returned to service.

Termination of Membership 

Membership in the retirement system is terminated by the death of a member, retirement of a member or occurs when a member withdraws accumulated contributions regardless of the number of accumulated years of creditable service. For non-vested members, termination of membership will occur when you have not been an active member of the system for more than three (3) consecutive years after separation.

Tax on Refunds 

If a member terminates employment and wishes to take a refund of their contributions plus accumulated interest in lieu of a pension, they are subject to a mandatory 20% federal tax withholding plus a possible 10% excise tax (if the member is under age 59 1/2) on the "taxable portion" of said refund. The taxable portion of a refund is the interest paid by the system on the member's account, plus all employee contributions made on a pre-tax basis. The only way to avoid the 20% mandatory withholding on a withdrawal is to direct the Retirement System to roll over the taxable monies to another qualified tax-sheltered plan. Taxable amounts of less than $200.00 are not subject to the mandatory withholding. This withholding does not apply to pension benefits. This federal regulation became effective January 1, 1993 for all lump sum distributions payable to a member at time of withdrawal.

Vested Deferred Membership 

Even if your active membership in the VSERS ends before you are eligible to retire, you may be entitled to a pension from the VSERS in the future. Once you have five or more years of service credit, you are vested and cannot lose your credit unless you elect to withdraw your contribution balance.

Transfer of Membership - Portability 

Members who leave their employment as an employee 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 any retirement benefit payments.

If a dual membership is established in one of the Vermont Retirement Systems, you will be notified by the retirement office of your option to transfer.

Retirement Service Credit 

You will receive retirement service credit for the time that you are employed and are enrolled as an active member in the System. With each 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; however, your lower gross earnings for the year will be reflected in a lower retirement benefit.

If you transfer qualified service credit from another plan, it will be included in your accumulated service credit. In addition, you may be eligible to purchase or be granted some types of qualifying service credit.

You will lose your retirement service credit and any retirement benefit if you terminate and withdraw your accumulated contributions. However, if you have five or more years of service and leave your contributions in the System, you are guaranteed a retirement benefit at the normal retirement age of 62, or an early retirement at age 55. All you need to do is contact the retirement office a few months before your planned retirement for an estimate and application forms.

Purchasing Credit 

You may purchase retirement credit for a number of situations including service in the military, Peace Corps, or VISTA (after completion of 15 years of service); as an employee in another state or municipality; as a teacher in a public or private school; and with the State of Vermont (other than temporary or contractual employment) 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 with the service.  Please complete the Application To Purchase Service Credit Form and return it to our office with the years you are intereted 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 to purchase, the purchase cost, and the timeframes associated with the purchase.

You may also make a contribution to increase the benefit percentage for Group F service before January 1, 1991 from 1.25% to 1.67%.

With at least twenty-five years of service, you also may purchase up to five additional years, called "air time". Air time is non-qualifying time, as opposed to any type of actual service performed. For example, if you began employment immediately following graduation, and worked for twenty-five years as a Vermont State Employee, you could purchase the remaining five years of air time and retire with thirty years of service.

Air time cannot exceed five years of creditable service. Total military service also cannot exceed five years. Total purchase for non-military service is limited to ten years of credit, and in no case can a combined total of more than twenty years of service be purchased.

There can be no parallel retirement rights in any other system for the credit you purchase. You should contact the Retirement Office for final cost figures and return on investment information as well as the application procedure.

You may also use the calculator on our web site for an estimate of the cost to purchase service.

Important Note: You may make purchases with post-tax dollars or with pre-tax dollars as a direct roll-over from your 403(b), 457, 401(a), 401(k), or IRA account.

Grant of Service Credit 

You may be eligible for a grant of service credit in the VSERS for certain qualifying events. Upon application you may be granted service credit for up to three years of military service in the Korean War and Vietnam Conflict, provided you have 15 years of creditable service. You may also qualify for service credit if during your membership in the VSERS your employer granted a leave of absence to you for professional study.

Military, Legislative or Jury Duty Leave Credit 

If a member is required to take a leave of absence from their present employer to serve in the military, they are entitled to credit in the retirement system for that period of leave if they return to work within 90 days of discharge. If a member takes a leave of absence to serve in the Legislature or on jury duty, or because of a workers comp injury, they are entitled to credit in the retirement system as well. Employers are notified that they must report such leaves to the system, but it is the responsibility of the employee to be sure that the proper credit is made.

For example, if a member takes two weeks of leave without pay for military duty, the service credit that the member receives for that fiscal year may be reduced because of the off-payroll status unless the Retirement Office has received proper notification. The annual statement should always be thoroughly reviewed, and if there appears to be a discrepancy or question about the service credit, the Retirement Office should be contacted, immediately.

Approved Leave of Absence 

After July 1, 2000 if you take an approved leave of absence for purposes other than for professional study, service credit shall be restored upon payment of the contributions that you would have made into the system had you been employed during your absence.

Restoration of Service Credit 

You may restore service credit from a prior membership in the System, which was lost due to a withdrawal.

Eligibility for Retirement 
Normal Retirement

You are eligible to receive a normal retirement benefit when you reach age 62 or have 30 years of service at any age, whichever comes first.

Early Retirement

You are eligible for an early retirement benefit after you have completed five years of service and have attained age 55. A 6% per year early retirement reduction will be imposed for each year under the age of 62.

Vested Deferred Retirement

If you terminate service before age 55, and accrue five (5) or more years of service before termination you may be eligible for a vested deferred retirement benefit.

Disability Retirement

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.

If you become disabled, you are eligible to apply for disability retirement if your application is filed not later than 90 days after the date you separated from service, and you have met the criteria listed above. Your application is subject to review and certification by the Medical Review Board (MRB) and approval by the Board of Trustees that you are disabled on the basis of medical evidence. You are considered eligible for a disability pension if it is certified by the MRB that you have a physical or mental condition that prevents you from performing the duties of your position.

An annual review of the status of your disability may occur and would be based thereafter on your ability to perform any occupation. Post-disability income would be considered and can reduce your benefit. Your eligibility ceases at the end of the month in which you recover and/or are determined no longer disabled. Termination of a disability pension does not affect your right to apply for a transfer to a normal or early pension benefit, if qualified.

You should contact the Retirement Office if you have any questions concerning disability benefits or the application process.

Applying for Benefits 

Retirement benefits are not automatic; you must apply for them. Contact the Retirement Office at least nine months prior to the date that you plan to retire for an estimate, application materials, and health insurance and tax forms. Upon written application you may retire on a service retirement allowance on the first day of the calendar month in which the benefit is to begin, or following your separation from service, whichever date is later, provided that you have attained age sixty-two or have completed thirty years of creditable service at the date of retirement.

Retirement benefits are paid monthly 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. Your written application must be filed prior to payment of retirement benefits.

Electronic banking is mandatory for all new retirements after January 1, 1999. A retiree shall have the monthly check electronically deposited to a checking or savings account. The pension is in the retiree's account on the last working day of each month.

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.

Tax on Retirement Benefits 

Retirement benefit payments are comprised of annuity (the portion of the benefit that comes from the member's contributions), and pension (the portion paid by the retirement system).

Most of your benefit will be taxable, but an exclusion ratio will be applied so that a specified amount will be excluded from tax if you made contributions prior to March 1, 1998 on an after-tax basis. This exclusion ratio is based on the total after-tax contributions that you made during employment, or from a pre-tax purchase of service credit, prior to retirement.

Federal tax regulations require that we withhold tax on retirement allowances for all recipients unless a waiver of withholding form is filed with this office. Members will receive more detailed information regarding tax withholding at the time they retire.

A Form 1099R will be mailed following the end of each calendar year that provides the necessary information to file tax returns. It should be noted that the payment dated December 31 would be included in that calendar year total, even though it may not be received until January. The Retirement Office is, however, unable to further assist or advise in the preparation of members' tax returns. Retirees should consult an accountant or attorney, or Federal and State tax authorities, for any other information concerning taxation of the allowance received from the VSERS.

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.

Calculating Your Retirement Benefits 
Normal Retirement

One of the components in calculating the amount of your pension benefit is determined by your Average Final Compensation (AFC). Your AFC is the average of your highest three consecutive fiscal year earnings or the average of your last 36 months, whichever is higher. Another component is the number of your years of creditable service at retirement or termination.

For normal retirement at age 62 or with 30 years of service, there is no reduction in benefits for age. If you are under age 62 and have fewer than 30 years of service, but are 55 or over with a least five years of creditable service, you may qualify for a reduced early retirement benefit.

Assuming you have 30 years of service or are age 62, your annual benefit is calculated as follows:

Group E Service x .0125 x AFC

(Service prior to 1/1/91)

plus

Group F Service x .0167 x AFC

(Service from 1/1/91)

For example, if your three highest consecutive years of salary were $39,000, $42,000, and $45,000, (the AFC would be $42,000) and you have 20 years of service under Group E service and 10 years under Group F, your benefit would be calculated as:

20 x .0125 x $42,000

plus

10 x .0167 x $42,000

equals

$17,514 annually or

about $1,460 a month

Note that age has no impact upon this retirement benefit because you have 30 years of service. This is called the basic or the maximum benefit. It is paid in full for your life, or it may be reduced to provide a survivor benefit. By law, your maximum benefit cannot exceed 50% of your AFC.

Spiking Law

"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 compensation. If a member's compensable hours in any year used to calculate average final compensation exceeds 120 percent of average compensable hours, the compensation 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.

Early Retirement

If you are age 55 and have at least 5 years of service, you can take early retirement. Your benefit is calculated the same as a normal retirement benefit, but a reduction of 6% for every year you are under age 62 (or ½% for every month you are under age 62) is applied.

For instance, if you have an AFC of $35,000 and are age 58 and 3 months at retirement with 25 years of Group C service, the early reduction factor would be .775 and your benefit would be:

25 x .0167 x $35,000 x .775

equals

$11,325 annually or

about $944 a month

If you have 20 years of service as a facility employee in the Department of Corrections, or are a direct care provider at the Vermont State Hospital, or a facility employee at Woodside, there is no reduction for early retirement.

If you are an employee of the Department of Fish and Wildlife assigned to law enforcement, or are assigned to airport firefighting duties, there is no reduction for early retirement.

A state's attorney who has completed 20 years of creditable service, of which 15 years has been as a state's attorney, shall have no early retirement penalty at age 55.

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. If the disability is the result of a work-related injury, then there is no service requirement. Your disability benefit is calculated the same way as a normal benefit, except there is a minimum benefit payable of 25% of your AFC.

Please note that you must apply for a disability retirement benefit within 90 days after separation of service with the State of Vermont.

Vested Benefit

If you have 5 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 age 62 (or as early as age 55 with a penalty applied), and is calculated in the same way as a normal retirement benefit or early retirement depending on your age.

You may always request a refund of your retirement plan contributions plus accumulated interest even after your account has been placed in a vested, deferred status. A refund will cancel your retirement service credit and any right to future retirement benefits.

Survivor Benefits (Death In Service) 
Eligibility

Death benefits are any payment made by the retirement system to a beneficiary of a deceased member of the system. Such payments may take the form of the refund of the accumulated contributions, or lifetime monthly payments if the beneficiary qualifies for such payments.

If you die as a member before termination or retirement and have 10 years of service or are age 55 with five years of service, a benefit is payable to your designated dependent beneficiary.

Amount of Survivor Benefit

The benefit payable to your designated dependent beneficiary is calculated as if you had retired on the date of death and had chosen Option 5 (100% Survivorship). Your designated dependent beneficiary may choose to receive a refund of contributions in lieu of the survivor benefit.

Children's Benefit

If you are in service at date of death or on leave of absence for professional study with one or more years of creditable service, or if your death was the result of an accident while on a leave of absence, a pension equal to 10% of your AFC but not less than $50 a month will be payable to up to three dependent children under age 18 and to age 23 if the child is a full-time, unmarried, dependent student. Additional provisions are applicable to disabled children.

Other

If you do not meet the eligibility requirements for a survivor benefit or do not have a designated dependent beneficiary, the lump sum value of your contributions and interest will be paid to your designated beneficiary or your estate.

Retirement Options 
Maximum Benefit

The basic or maximum benefit, is payable for your life with no benefit or refund of contributions at your death. If you make no election, your benefit will be paid as a Maximum benefit. At retirement you may choose to have a reduced benefit in order to provide continued income to your spouse or other beneficiary should you predecease them as outlined below.

Option 1

In a contributory system, there will always be accumulated member contributions in your account. By taking Option 1, the guaranteed annuity 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.

Option 2
Eliminated by Legislature on July 1, 2009.
 
100% Survivorship

This option provides for your beneficiary to receive the same monthly allowance for life that you were receiving, should you predecease your designated beneficiary. The reduction for the 100% survivorship option from the basic benefit averages between 10% and 25%, depending upon the difference in your ages.

100% Survivorship Pop-Up

The 100% pop-up option provides a benefit that is slightly lower than the straight survivorship option, but increases the payment to your basic benefit (maximum) should your beneficiary predecease you, or based on the stipulations contained in a domestic relations order.

50% Survivorship

This option differs from the 100% survivorship in that your beneficiary receives 50% of the benefit that you were receiving should you predecease your designated beneficiary, therefore the reduction from the basic benefit is less. The reduction averages between 5% and 15% depending on the difference in your ages.

50% Survivorship Pop-Up

As in the earlier pop-up option, this option provides lower initial payments to you and your beneficiary, but with an increased benefit should your beneficiary die first, or based on the stipulations contained in a domestic relations order.

Examples of Survivorship Options 
Option Amount Payable to Retired Member (retired at age 62) Amount Payable to Beneficiary (two years younger)
Basic Benefit $1,000 $0
100% Survivorship    
 Regular $807 $807
 Pop-Up $788* $788
50% Survivorship    
 Regular $893 $446
 Pop-Up $881* $440

 

*If beneficiary dies first, the member's benefit pops up to $1,000 in this case.

Level Income Option

At age 62, you will probably be eligible to receive a Social Security retirement benefit. Some members, however, retire before reaching age 62 and would like to increase their benefit through the Level Income Option.

Under this option, a member elects to receive a percentage of the member's estimated Social Security benefit from the Retirement System before Social Security actually begins, and then receives a reduced allowance from the System after age 62 when Social Security is received. The actual Social Security benefits you receive will not affect the Level Income Option after the initial calculations are made.

For example, suppose you have received an estimate from the Social Security Administration that your benefit at age 62, if you retire now, will be $600 monthly. Further suppose your retirement benefit from the System is $800 monthly. Under this option a percentage of the estimated Social Security benefit based upon your age (the younger you are, the smaller the percentage), is added to your retirement benefit. If you are age 59, for example, with the above $600 estimate from Social Security, $470 would be added to your retirement benefit and you would receive a total of $1,270 monthly from the System until you reach 62. At age 62, $600 would be subtracted from your monthly amount and you could receive $670 thereafter for the remainder of your lifetime.

The $600 from Social Security keeps your total income "level", so you will receive a total of $1,270 each month from the System and Social Security.

If you also elect a survivorship option, the survivor benefit is paid based on your benefit before adjustments for the Level Income Option. On an actuarial basis, the Level Income Option is cost neutral. It sometimes allows a member to retire when retirement would otherwise be impossible, but if the member lives far beyond age 62, the option may have been a poor choice since the reduction in benefit after age 62 will continue for as long as you live.

Cost-of-Living Adjustment (COLA) 

Group F retirees receive cost-of-living adjustments if they retired with a normal or disability retirement allowance and 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 1/2 of the preceding June 30 Consumer Price Index (CPI) increase, with an annual ceiling of 5% and a minimum of 1%.

Commencing January 1, 2014, the retirement COLA for active contributing group F members who retire on or after July 1, 2008 will be equal to the full CPI for the preceding June 30th, with a minimum of 1% and a maximum of 5%.

Group F members who retire under an early retirement allowance will receive a COLA the January after attaining the age of 62.

Employment After Retirement 

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 benefit will be layered on top of 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 may elect a new option for the additional benefit.

Changes in the Monthly Pension Check 

It may be necessary from time to time to change tax withholdings, the regular mailing or alternate mailing address, or make changes due to divorce or death. It is the responsibility of the retiree to notify our office in writing of any changes that must be made to your pension check. Changes received by the 15th of any month can be processed for that month. If changes are received after the 15th, we cannot guarantee that the change will occur for that month.

Actuary's Report 

The law requires that an approved actuary make an annual valuation of the System's assets and liabilities. The actuarial valuation determines the financial condition of the retirement fund and the required state contribution to the System. The System's consulting actuary also does other special studies related to new or proposed legislation. A copy of the System's current actuarial valuation is available and may be reviewed at the Retirement Office.

Other Retirement and Survivorship Benefits 
Health Insurance After Retirement

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 service you have at retirement.  If you have 20 or more years at retirement, you will continue to pay 20% of the premium as you have during your active employment. You must be a covered employee at retirement, and may carry whatever coverage is in effect at that time into retirement.

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.

If you elect to drop the coverage for yourself or your dependent(s) at any time after retirement, you will not be able to begin health insurance coverage again at a later date.

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 may continue coverage in the group plan, but must pay the full premium cost of the health insurance. 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.

Dental Insurance

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.

View chart showing levels of coverage performed by dentists who participate in the Delta Dental Premier network.

Life Insurance

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.

Social Security

Some retirement systems are integrated with Social Security, and the amount of one's retirement check depends upon the benefit from the federal government. The 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.

Single Deposit Investment Account (SDIA)

The single deposit investment account was another option that was available to members to increase their income at retirement by allowing contributions to be deposited into a tax-sheltered account upon transfer from the non-contributory system established in 1981. SDIA money is available for withdrawal upon termination of employment or retirement, but a penalty will be applied for withdrawals from the taxable portion prior to age 59 ½, unless retirement occurs after age 55. Please contact Great-West for distribution information.

Deferred Compensation

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 www.vermonttreasurer.gov/retirement/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.