Membership in the System 

You are a Group A member if you were employed as a public school teacher within the State of Vermont prior to July 1, 1981 and elected to remain a Group A member.

Member and State Contributions 

Group A members make annual pre-tax contributions equal to 5.5% of pay into the trust fund, which is administered by the Board of Trustees. Your contributions cease following 25 years of service, with additional credit granted to those members who retire under a normal retirement and who had contributed for more than 25 years as of July 1, 1990. 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.

Retirement Service Credit 

You will receive retirement service credit for each year that you are employed as a full-time teacher as an active member in the System.  If you work part-time, you will receive partial credit based on the percentage of full-time pay you receive. In addition, you may be eligible to purchase service.

If on July 1, 1990 you had contributed for more than 25 years, upon normal retirement you will receive additional service credit for each year up to five years you made contributions in excess of 25 years.

Service credit also includes up to three years of military service in the Korean War and Vietnam Conflict, provided you have 15 years of creditable teaching service.

You will lose your retirement service credit and any retirement benefit if you terminate and withdraw your accumulated contributions. Once you have terminated employment and have been inactive for six out of seven consecutive years, we will contact you to either vest your account or withdraw your accumulated contributions. If you have fewer than ten years of service, you must withdraw your contributions. Once you have ten years of service, you are vested and cannot lose your credit unless you elect to withdraw your contribution balance.

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Eligibility for Retirement 

Normal Retirement

You are eligible to receive a normal retirement benefit when you reach age 60 or have 30 years of service, whichever comes first.

Early Retirement

You are eligible for an early retirement benefit if you have completed five years of service credit and have attained age 55. If you terminate service before age 55, you are not eligible for early retirement benefits, although you may be eligible for vested benefits.

Disability Retirement

You are eligible for disability retirement if you have at least five years of service and the Board of Trustees determines that you are disabled on the basis of medical evidence. You should contact the retirement office if you have any questions concerning disability benefits or the application process.

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Retirement Benefits Calculation 

Normal Retirement

The amount of your pension benefit is determined by your Average Final Compensation (AFC), which is the average of your three highest consecutive years of earnings and your creditable service at retirement or termination. For normal retirement, that is, retirement at age 60 or with 30 years of service, there is no reduction for age. If you are under age 60 or have fewer than 30 years of service, you may qualify for a reduced early retirement benefit.

Assuming you have 30 years of service or are age 60, your annual benefit is calculated as follows: Group A Service X .0167 X AFC.

For example, if your three highest consecutive years of salary were $39,000, $42,000, and $45,000, and you have 30 years of Group A service, your benefit would be calculated as:

.0167 x 30 x $42,000

equals

$21,000 annually or about $1,750 a month

Note that age has no impact upon this retirement benefit because you have 30 years of service. This is called Option 1 or the basic benefit. It is paid in full for your life, or it may be reduced to provide a survivor benefit. If on July 1, 1990 you had contributed for more than 30 years, the contributions you made after 25 years will be converted into an additional annuity.

Early Retirement

If you are age 55, you can take early retirement. Your benefit equals: A normal retirement benefit based on AFC at early retirement and the service you would have had at normal retirement times. The ratio of your service at early retirement to the service you would have had at normal retirement less. A reduction for every year you are under age 60

For instance, if you have an AFC of $35,000 and are age 58 at retirement with 25 years of Group A service, the early reduction factor would be .726 and your benefit would be:

.0167 x 25 x $35,000 x .726

equals

$10,608 annually or about $884 a month

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 ten 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.

Vested Benefit

If you have five or more years of service credit and leave teacher 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 60, and is calculated in the same way as a normal retirement benefit (above). If you would rather have a return of your contributions plus accumulated interest, you may request a refund of your contributions. A refund will cancel your retirement service credit and any right to future retirement benefits.

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Survivor Benefits After Death In Service 

Eligibility

If you die as a member before termination or retirement and have 20 years of service or are age 60, a benefit is payable to your dependent beneficiary.

Amount of Survivor Benefit

The benefit payable to your dependent beneficiary is calculated as if you had retired on the date of death and had chosen Option 5 (100% Survivorship). Your 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 and have completed one or more years of creditable service, or if your death was the result of an accident during your first year of service, a pension equal to 10% of your AFC but not less than $50 a month will be payable on account of each dependent child under age 18 up to a total of three or up to age 23 if the child is a dependent student.

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Retirement Options 

Option 1 (Basic Benefit)

The basic benefit, or option 1, 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 an Option 1 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 2 (Guaranteed Return)

In a contributory system, there will always be accumulated member contributions on your account. By taking Option 2, you receive a benefit slightly lower than the basic benefit, but the balance of your accumulated contributions, less the sum of annuity (portion of total benefit attributable to your contributions) 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 3 (50% Survivorship)

This option provides for your beneficiary to receive 50% of the benefit you were receiving should you predecease your designated beneficiary. The reduction for this option from the Option 1 benefit averages between 5% and 15% depending on the ages of you and your beneficiary.

Option 4 (75% Survivorship)

This option is similar to Option 3, but your beneficiary receives 75% of the benefit you were receiving. Since the beneficiary's benefit is greater than it would be under Option 3, the reduction in your benefit is also greater. The reduction averages between 7% and 20%, depending on the difference in your ages.

Option 5 (100% Survivorship)

This option is also similar to Option 3, but your beneficiary receives 100% of the benefit you were receiving. Since the beneficiary's benefit is greater than Option 3 or Option 4, there is a greater reduction in your benefit. The reduction averages between 10% and 25%, depending on the difference in your ages.

Pop-Up Options

Each of Options 3, 4, and 5 can be elected with a pop-up feature. This provides that if your beneficiary dies first or based on the stipulations contained in a Domestic Relations order, your benefit will increase to the amount which would have been payable under Option 1. As a result, the reduction in your payment is slightly greater than it would be under the options without the pop-up feature.

Examples of Survivorship Options

Level Income Option

When you are 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 pays the System back for the months of prepayment the member has received. 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, and 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 were 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. 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.

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Cost-of-Living Adjustment (COLA) 

Retired Group A members receive cost-of-living adjustments after they have received twelve checks. These adjustments are made each January, and are based upon the preceding June 30 Consumer Price Index (CPI) increase, with an annual ceiling of 5%.

Purchasing Credit 

You may purchase retirement credit for a number of situations, including: service in the military, in the Peace Corps, or in VISTA; service as a municipal employee; teaching service in another state; or teaching in a school which was not part of the System or with the State of Vermont for which you received no retirement credit.

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 10 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.

Employment After Retirement 

You may generally earn other income while you are receiving a retirement benefit without restriction. If you retire and return to work as a teacher, however, and you earn more than 50% of the current average teacher's earnings or work more than the maximum period for substitute teachers, your retirement benefit will be "frozen" and the benefit you earn after reemployment will be added to 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.

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Applying for Benefits 

Retirement benefits are not automatic; you must apply for them. Sometime during the year in which you plan to retire you should contact the retirement office for an 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, based on the total after-tax contributions you made prior to retirement. 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.

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.

Portability 

Members who leave their employment as a teacher and join either the Vermont State Employees 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.

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Other Retirement and Survivor Benefits 

Group Health Insurance

If you receive a monthly retirement allowance, you are eligible to participate in the retired teachers group medical insurance plans. Coverage is effective the date of retirement or later if your district provides coverage to the anniversary date of its plan. If you have ten or more years of service credit the Retirement System pays a flat amount toward your monthly premium and the balance is withheld from your check. When you reach age 65 or become eligible for Medicare, the plans share the liability for your medical coverage. It is important that you enroll in both part A and Part B of Medicare as soon as you become eligible. If you do not enroll in Part B, there will be a gap in your insurance coverage.

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 is another option which 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. 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 59½, unless retirement occurs after age 55.

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