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Pre Retirement Workbook

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					Pre-Retirement Planning
                             Effective February 1, 2005




                           Presented by:

                      Barbara Beermann
                     Senior Training and Education Specialist


                         Jessica Mundell
                     Senior Training and Education Specialist




              As a courtesy to other participants during the seminar,
   please turn off all cell phones and pagers or place in “silent” or vibrate mode.

                                    Thank you.




                              M OSERS              ®
Pre-Retirement Planning




    Workbook Contents

                  Defined Benefit Plan ................................................................3
                  How is My Retirement Funded? ..............................................3
                  Missouri State Employees’ Plan (MSEP) ..................................4
                  Missouri State Employees’ Plan 2000 (MSEP 2000) ................4
                  Normal Retirement Eligibility ..................................................5
                  Early Retirement Eligibility ......................................................5
                  Remember These Terms ...........................................................6
                  Date Forms Are Due ................................................................6
                  Applying for Retirement ..........................................................7
                  Designation of Agent ...............................................................8
                  Direct Deposit of Funds ..........................................................8
                  Annual Retiree Benefit Statement ............................................9
                  Normal Retirement: Base Benefit Formula ...............................9
                  Final Average Pay .....................................................................9
                  Multiplier: Base Benefit..........................................................10
                  Multiplier: Temporary Benefit................................................10
                  Credited Service .....................................................................11
                  Benefit Calculation Examples.................................................13
                  Web Site: www.mosers.org .....................................................14
                  Benefit Payment Options .......................................................15
                  Deferred Retirement Option Provision (BackDROP) ............18
                  Cost-of-Living Allowance (COLA) ........................................23
                  Death Before Retirement .......................................................25
                  Basic Life Insurance ...............................................................26
                  Optional Life Insurance .........................................................27
                  Effect of Reemployment ........................................................29
                  Newsletters ............................................................................30
                  Additional Educational Workshops ........................................31
                  When to Contact MOSERS ..................................................32




                              Some benefits discussed today may not apply to all
                       universities or agencies such as the Department of Conservation.




2    Missouri State Employees’ Retirement System               •       PO Box 209           •         Jefferson City, MO 65102-0209
                                                                                Pre-Retirement Planning




Defined Benefit Plan
 • Five years of service required to become “vested” (eligible for a retirement benefit once you meet age
   and service requirements).
 • Your benefit is calculated using a three-part formula.



How is My Retirement Funded?
 • Contributory - Nationwide, most plans for state employees require member contributions. The
   average member contribution rate in contributory systems where members are also covered by social
   security is 5% of pay.
 • Non-contributory - You do not contribute toward your retirement benefit. Your employer makes
   contributions each month. The current rate is 12.59% of payroll (as of July 2005). The Missouri
   State Employees’ Retirement System (MOSERS) and the MoDOT and Patrol Employees’
   Retirement System (MPERS) are non-contributory plans.

  Each October, the MOSERS Board of Trustees establishes a contribution rate for the next fiscal year.
  The contribution rate, which is set as a percentage of payroll, is actuarially calculated to cover the
  system’s benefit obligations and administrative costs for the coming fiscal year and the future. When the
  system’s actuary calculates the contribution rate, it is based on a number of factors including the current
  level of benefits; how many members are in the plan; current and expected future pay levels; the age,
  service, and life expectancy of members; expected earnings on investments; and the plan’s unfunded
  liability. To find out more about how your retirement is funded, consult MOSERS’ Summary Annual
  Financial Report, mailed to your home each year, which includes:

    •   Actuarial information.
    •   Investment information.
    •   Legislative review.
    •   Financial statements.




 Phone: (573) 632-6100 •   Toll Free: (800) 827-1063   • E-mail: mosers@mosers.org   •   Web Site: www.mosers.org   3
Pre-Retirement Planning




Missouri State Employees’ Plan (MSEP)
    The MSEP is the existing retirement plan for general employees hired before July 1, 2000. You will
    continue to participate in the MSEP until retirement if one of the following categories describes your
    employment status on June 30, 2000. At retirement, you may elect the MSEP or the MSEP 2000 if
    you:

    • Were an active, vested member of the MSEP and hired before July 1, 2000.
    • Were a terminated-vested member of the MSEP (eligible for future retirement benefits under the
      MSEP, but no longer working for the state).
    • Elected the Cash-Out Option under the MSEP and returned to work in a MOSERS covered
      position.
    • Were receiving disability benefits through the MOSERS disability plan.
    • Were on a leave of absence.



Missouri State Employees’ Plan 2000 (MSEP 2000)
                                            Effective July 1, 2000, the retirement plan for new general state
                                            employees is the MSEP 2000. You will be a member of the MSEP
                                            2000 if one of the following categories describes your employment
                                            status on or after July 1, 2000:

                                            •        You were hired for the first time in a benefit eligible position on
                                                     or after July 1, 2000.
                                            •        You left state employment prior to becoming vested (not eligible
                                                     for a future retirement benefit) and returned to work in a benefit
     MSEP or MSEP 2000?                              eligible position on or after July 1, 2000.




4      Missouri State Employees’ Retirement System          •      PO Box 209    •       Jefferson City, MO 65102-0209
                                                                                     Pre-Retirement Planning




Normal Retirement Eligibility
  MSEP (Old Plan)
      •   Age 60 with 15 years of service
      •   Age 65 with 5 years of service
      •   Age 65 and active with 4 years of service (if retiring directly from active employment)
      •   “Rule of 80” – minimum age* plus service equaling 80 or more


  MSEP 2000 (New Plan)
      • Age 62 with 5 years of service
      • “Rule of 80” – minimum age* plus service equaling 80 or more

  * Minimum Age:     Age 50 for members eligible to retire before August 28, 2003
                     Age 48 for members eligible to retire on or after August 28, 2003


      Example of “Rule of 80”
      Age                  53 years     4 months
      Service              26 years     8 months
                           79 years    12 months             =     80




Early Retirement Eligibility
  MSEP (Old Plan)
      • Age 55 with 10 years of service

  MSEP 2000 (New Plan)
      • Age 57 with 5 years of service

  If you elect early retirement, your base benefit is reduced by one-half of one percent (.005) for each
  month your age at early retirement is younger than your normal retirement age.




 Phone: (573) 632-6100 •   Toll Free: (800) 827-1063   • E-mail: mosers@mosers.org       •   Web Site: www.mosers.org   5
Pre-Retirement Planning




    Remember These Terms
      • Termination Date - The date after which you are no longer an employee of the state, as reported by
        your employing department.
      • Retirement Date - The first day of a calendar month when you begin to receive retirement benefits.
        Before this date, you must:
             leave state employment,
             meet retirement eligibility criteria, and
             complete the two-step retirement process (application and election form).
      • Benefit Payment Date - The last working day of the month for each month in which you are retired.
      • Retirement Anniversary Date - The same calendar month each year in which you first retired.
      • First Normal Retirement Eligibility Date - The date on which you first become eligible for
        MOSERS retirement with normal retirement benefits.
      • Application Form Due Date - The date shown on the chart below. MOSERS suggests you submit
        the application form 45-90 days before retirement date.
      • Election Form Due Date - The day before your retirement date.



    Date Forms are Due

               Date of                    Application for          Retirement Election
              Retirement                  Retirement Due                Form Due
                January 1                   November 30                 December 31
               February 1                    December 31                    January 31
                March 1                       January 31                    February 28
                 April 1                     February 28                     March 31
                  May 1                        March 31                      April 30
                  June 1                        April 30                     May 31
                  July 1                        May 31                       June 30
                August 1                        June 30                       July 31
              September 1                       July 31                     August 31
               October 1                       August 31                September 30
              November 1                    September 30                    October 31
              December 1                      October 31                November 30




6       Missouri State Employees’ Retirement System        •   PO Box 209       •         Jefferson City, MO 65102-0209
                                                                                Pre-Retirement Planning




Applying for Retirement
  Obtain a MOSERS retirement packet from your human resources representative or MOSERS.

  Two-Step Retirement Process
  The application process consists of two steps. This will allow MOSERS to provide you with
  individualized information needed to make informed decisions regarding your retirement benefit
  payment.



      Step 1
      Complete and submit an Application for Retirement by mail or fax. The retirement application
      must be dated and received by MOSERS by the date shown on the chart on page 6 or your
      retirement will be delayed. Along with the Application for Retirement, please submit a copy of:
          • A proof-of-age document for yourself (birth certificate, military DD214 discharge form
             or a passport {current or expired}).
          • A proof-of-age document for your spouse (if applicable).
          • Your current marriage certificate (if applicable).



  Please submit all forms in the packet with your application form. If you submit an Application for
  Retirement and then decide not to retire, please send MOSERS a written notice to rescind your
  application. After MOSERS receives your Application for Retirement, a Retirement Election Form and
  benefit estimate will be prepared and sent to you.




      Step 2
      Complete and submit the Retirement Election Form. On the election form, you will choose a
      retirement plan, a benefit payment option, and whether or not you wish to utilize the
      BackDROP (if eligible). The election form must be received by MOSERS prior to your date of
      retirement.




 Phone: (573) 632-6100 •   Toll Free: (800) 827-1063   • E-mail: mosers@mosers.org   •   Web Site: www.mosers.org   7
Pre-Retirement Planning




Designation of Agent
    You can name an agent to receive your MOSERS retirement benefit if you become incapacitated. If you
    do not name an agent, powers may be granted by law, in the following order, to (1) spouse, (2) child,
    (3) parent, (4) brother or sister, or (5) niece, nephew, grandchild. The powers of an agent become
    effective upon submission of a written statement from your physician stating your incapacity.

    The Designation of Agent form can be found in the MOSERS retirement packet, obtained by
    downloading it from the MOSERS web site or by contacting a benefit counselor.



Direct Deposit of Funds
                                                         The standard payment method for receiving your
                                                         monthly benefit is direct deposit. Direct deposit
                                                         places your benefit payment electronically into your
                                                         checking or savings account on the last working
                                                         day of each month. This method provides a safe,
                                                         easy, and trouble-free way for you to receive your
                                                         monthly benefit. You must complete the Direct
                                                         Deposit Authorization form, even if your salary is
                                                         automatically deposited now.

    The Direct Deposit Authorization form is completed by you and your financial institution.

    You may check the “Yes” or “No” box at the top of the authorization form to indicate whether or
    not you would like to receive a monthly payment stub. If you do not make an election, you will
    automatically receive a payment stub each month.

    Cash is considered taxable income during the year you receive it. If applicable, the following deductions
    may be withheld from your monthly benefit payment:

    • Missouri income tax as specified on your Substitute W-4P form.
    • Federal income tax as specified on your Substitute W-4P form. (Without this form, MOSERS is
      required to withhold federal taxes as if you are married and claiming three exemptions.)
    • Missouri Consolidated Health Care Plan premium
    • Health and life insurance premiums through the Department of Conservation
    • MOSERS optional life insurance premium

    Regardless of your retirement plan, you will receive cost-of-living allowances (COLAs) on your benefit
    payment, effective each year on the anniversary date of your retirement.


8      Missouri State Employees’ Retirement System   •     PO Box 209     •      Jefferson City, MO 65102-0209
                                                                                Pre-Retirement Planning




Annual Retiree Benefit Statement
  This document is mailed to your home during the anniversary month of your retirement
  and includes:

  •   Monthly benefit amount.
  •   Benefit payment option.
  •   Life insurance coverage and beneficiary information.
  •   COLA information.
  •   Deductions from your retirement benefit (if applicable):
       Medical insurance premium.
       Optional life insurance premium.
       Missouri income tax withholding.
       Federal income tax withholding.



Normal Retirement: Base Benefit Formula
  Final Average Pay (FAP) - The average of your highest 36 consecutive months of compensation.
  Multiplier - A number established by the legislature.
  Credited Service - Your years and months of service earned, purchased, or transferred.

         FAP x Multiplier x Credited Service = Monthly Base Benefit

Final Average Pay
  • Analyzes your entire pay history under MOSERS.
  • Uses your gross salary (before taxes, health insurance, cafeteria plan, etc.).
  • May include:
     Overtime pay.
     Holiday pay.

      Example of Final Average Pay
      Months         Year            Salary
        3            2005           $6,250                        Final Average Pay
       12            2004          $25,000                        $72,000 / 36 months = $2,000
       12            2003          $23,250
        9            2002          $17,500
       36            Total         $72,000


 Phone: (573) 632-6100 •   Toll Free: (800) 827-1063   • E-mail: mosers@mosers.org   •   Web Site: www.mosers.org   9
 Pre-Retirement Planning




 Multiplier: Base Benefit
     MSEP (Old Plan)
       • Multiplier is 1.6% (.016).
       • In the past, formula increases have been passed along to retirees (when the multiplier has been
         increased by the legislature).


       MSEP Benefit Multiplier History
       Year Enacted                      Factor
           1957                          0.83%
           1961                          1.00%
           1975                          1.25%
           1984                          1.33%
           1988                          1.50%
           1995                          1.60%

     MSEP 2000 (New Plan)
       • Multiplier is 1.7% (.017).
       • Formula increases will not be passed along to retirees.
       • Since the plan’s inception on July 1, 2000, there have been no changes to the multiplier.



 Multiplier: Temporary Benefit
     MSEP (Old Plan)
       • The temporary benefit does not exist in the MSEP.

     MSEP 2000 (New Plan)
       • Multiplier is .8% (.008).
       • Available to normal retirees who retire under the “Rule of 80.”
          Not available to early retirees.
          Not available to survivors or beneficiaries.
       • Designed to provide you with supplemental income until you are eligible for early (reduced)
         social security benefits (currently age 62).
       • MOSERS does not require you to file for early social security benefits. It is an individual
         decision.




10     Missouri State Employees’ Retirement System   •   PO Box 209    •      Jefferson City, MO 65102-0209
                                                                                 Pre-Retirement Planning




Credited Service
  • Length of time you have worked in a MOSERS covered position.
  • Active military service:
     Some military service can be transferred automatically and some must be purchased.
     Purchase must include all military service up to a total of four years.
     Complete an Application to Purchase Active Duty Military Service form and attach a copy of your
       DD214 or NGB23. The application can be found in the Acquiring Service Credit brochure
       available from MOSERS or on the web site.
  • Credited prior service:
     Must be full-time, nonfederal, governmental, and rendered in Missouri.
     Depending on the type of service, some must be purchased and some may be acquired at no cost
       to you.
     Complete an Application to Purchase Other Missouri Public Service form and send the form to
       your previous employer. The application can be found in the Acquiring Service Credit brochure
       available from MOSERS or on the web site.


     Reasons for Purchasing Service
     • Will increase your total credited service.
     • May allow you to retire sooner.
     • May increase the amount of your retirement benefit.

     Service Purchases
     • Must be completed prior to retirement.
     • You may request an estimate from MOSERS without any obligation.
     • You may purchase service credit by using funds from your State of Missouri Deferred
       Compensation Plan (PEBSCO).

     How to Pay for Service Credit
     • Single lump sum (cash) payment.
     • Monthly payments (up to 24 months with interest).
     • Payroll deductions (up to 24 months with interest).
     • Rollover from a conduit IRA or an eligible retirement plan
       {i.e. PEBSCO, 403(b), 401(k), 401(a), etc.}.
     • A combination of any of the above.

                                                                            Credited Service continues on following page.


 Phone: (573) 632-6100 •   Toll Free: (800) 827-1063   • E-mail: mosers@mosers.org   •    Web Site: www.mosers.org          11
 Pre-Retirement Planning




 Credited Service (continued)
     • Unused sick leave:
        For every 168 hours (21 days) = one month of credited service (no partial months).
        Cannot be used to determine eligibility – WILL NOT ALLOW YOU TO RETIRE SOONER.
        Converts to credited service, which can increase your retirement benefit.
        Documentation of your hours will be transferred to MOSERS when you terminate.




                Purchasing service may
       increase your retirement benefit.




     For sick leave to count as credited service:
     MSEP - You must be eligible to retire on date of termination.
     MSEP 2000 - You do not have to be eligible to retire on date of termination.


     • Unused annual leave (MSEP & MSEP 2000):
        Cannot be used when calculating your retirement benefit.
        Your agency may pay you for your unused annual leave.




12     Missouri State Employees’ Retirement System   •   PO Box 209    •       Jefferson City, MO 65102-0209
                                                                                Pre-Retirement Planning




Benefit Calculation Examples

     MSEP (Old Plan)
      FAP         x        Multiplier       x      Credited Service        =     Monthly Benefit
     $2,000       x          .016           x       23.5000 years          =         $752


     MSEP 2000 (New Plan)
      FAP         x        Multiplier       x      Credited Service        =     Monthly Benefit
     $2,000       x          .017           x       23.5000 years          =         $799

                                                                                  (If Eligible)
      FAP         x        Multiplier       x      Credited Service        =   Temporary Benefit
     $2,000       x          .008           x       23.5000 years          =          $376


      Monthly Base Benefit             +         Temporary Benefit           =     Monthly Benefit
             $799                     +              $376                  =        $1,175




 Phone: (573) 632-6100 •   Toll Free: (800) 827-1063   • E-mail: mosers@mosers.org   •   Web Site: www.mosers.org   13
 Pre-Retirement Planning




 Web Site: www.mosers.org
                                       MOSERS has reorganized and expanded the content of the MOSERS
                                       web site with you in mind. Whether you are an active or retired
                                       member, you may access a variety of important information regarding
                                       your benefits.

                                       You will find general information about MOSERS investments and
                                       legislation affecting your retirement, as well as forms and brochures
                                       you can view and print. The site offers services ranging from links with
                                       other benefit providers to financial calculators for life insurance and
                                       service purchases.

                                       In addition, you can now access your own system data through a secure
                                       link on the site. After initially requesting a password, you may sign
                                       on to review your service and salary history, life insurance coverage
                                       and beneficiary information, and demographic details. You may also
                                       estimate your retirement benefits, including additional features such as
                                       BackDROP and cost-of-living allowances.




14   Missouri State Employees’ Retirement System     •      PO Box 209    •       Jefferson City, MO 65102-0209
                                                                                Pre-Retirement Planning




Benefit Payment Options
 The election of a benefit payment option determines whether or not a benefit will potentially be paid to
 anyone after your death.

 Regardless of the payment option you elect, you will receive a benefit payment each month for your
 lifetime. Your payment option and plan election cannot be changed after the first retirement benefit
 payment has been mailed or electronically transferred by MOSERS, except in two specific instances (see
 page 16).

 The payment options include:

 Life Income Annuity (MSEP & MSEP 2000)
 • Your retirement benefit will not be reduced.
 • No survivor benefits will be paid if you elect this option.
 • You must name a beneficiary to receive your final benefit payment from MOSERS.

 Unreduced Joint & 50% Survivor (MSEP)
 • Your retirement benefit will not be reduced to provide a survivor benefit for your spouse.
 • Your eligible spouse will receive 50% of the benefit amount you are receiving at the time of your
   death.

 Joint & 50% Survivor (MSEP 2000)
  • Your base benefit will be reduced to provide a survivor benefit for your spouse. The reduction will be
    based on the following factors:
      Your age at retirement.
      Full years difference in age between you and your spouse.
      Whether your spouse is older or younger than you.
  • Your eligible spouse will receive 50% of the benefit amount you are receiving at the time of your
    death (excluding the temporary benefit).

 Joint & 100% Survivor (MSEP)
  • Your retirement benefit will be reduced to provide a survivor benefit for your spouse.
     The reduction is 7% plus or minus 0.3 % for each full year your spouse is older or younger than
       you (minimum 4% reduction).
  • Your eligible spouse will receive 100% of the benefit amount you are receiving at the time of your
    death.
                                                               Benefit Payment Options continue on the following page




Phone: (573) 632-6100 •   Toll Free: (800) 827-1063   • E-mail: mosers@mosers.org    •   Web Site: www.mosers.org      15
 Pre-Retirement Planning




 Benefit Payment Options (continued)

     Joint & 100% Survivor (MSEP 2000)
     • Your base benefit will be reduced to provide a survivor benefit for your spouse. The reduction will be
       based on the following factors:
        Your age at retirement.
        Full years difference in age between you and your spouse.
        Whether your spouse is older or younger than you.
     • Your eligible spouse will receive 100% of the benefit amount you are receiving at the time of your
       death (excluding the temporary benefit).


        Pop-Up Provision
        If you elect a joint & survivor option (requiring a reduction) and your spouse precedes you
        in death, your benefit will revert (pop-up) to the Life Income Annuity amount. The effective
        date of the pop-up will be the first of the month following your spouse’s date of death. The
        pop-up is not automatic. You must provide MOSERS with a copy of your spouse’s death certificate
        before your benefit will be adjusted.




        Marriage After Retirement
        When you retire and elect a benefit payment option, there are two circumstances under which
        you may reelect your benefit payment option:

        • If you are single at retirement (not eligible to elect a joint & survivor option) and elect the
          Life Income Annuity Option, you may change your benefit payment option if you later
          marry.* You will have one year from your date of marriage to reelect one of the joint &
          survivor options and name your spouse as the beneficiary.
        • If you are married and elect one of the joint & survivor options on your Retirement
          Election form and your spouse dies, this provision will allow you to provide a survivor benefit
          for your new spouse if you remarry. You will have one year from your date of marriage to
          reelect one of the joint & survivor options and name your new spouse as the beneficiary.

        * Please call our office or go to www.mosers.org for a “Designation of New Spouse as Beneficiary for Retirement Benefits” form.




16      Missouri State Employees’ Retirement System               •       PO Box 209         •          Jefferson City, MO 65102-0209
                                                                                Pre-Retirement Planning




Benefit Payment Options (continued)
  Life Income With 60 Guaranteed Payments (MSEP)
  • Your retirement benefit will be reduced by 3%.
  • You must name a beneficiary (can be anyone) to receive your final benefit payment from MOSERS
    and the remaining number of guaranteed payments (if any).

  Life Income With 120 Guaranteed Payments (MSEP)
  • Your retirement benefit will be reduced by 9%.
  • You must name a beneficiary (can be anyone) to receive your final benefit payment from MOSERS
    and the remaining number of guaranteed payments (if any).

  Life Income With 120 Guaranteed Payments (MSEP 2000)
  • Your retirement benefit will be reduced by 5%.
  • You must name a beneficiary (can be anyone) to receive your final benefit payment from MOSERS
    and the remaining number of guaranteed payments (if any, excluding the temporary benefit).

  Life Income With 180 Guaranteed Payments (MSEP 2000)
  • Your retirement benefit will be reduced by 10%.
  • You must name a beneficiary (can be anyone) to receive your final benefit payment from MOSERS
    and the remaining number of guaranteed payments (if any, excluding the temporary benefit).



      Benefit Payment Options Summary
      MSEP                                                     MSEP 2000
      Life Income Annuity                                      Life Income Annuity
      Unreduced Joint & 50% Survivor                           Joint & 50% Survivor
      Joint & 100% Survivor                                    Joint & 100% Survivor
      Life Income With 60 Guaranteed Payments                  Life Income With 120 Guaranteed Payments
      Life Income With 120 Guaranteed Payments                 Life Income With 180 Guaranteed Payments




 Phone: (573) 632-6100 •   Toll Free: (800) 827-1063   • E-mail: mosers@mosers.org   •   Web Site: www.mosers.org   17
 Pre-Retirement Planning




 Deferred Retirement Option Provision (BackDROP)
     Legislation affecting the Deferred Retirement Option Provision (BackDROP) became effective in 2002.

     BackDROP is an option you may be able to elect upon retirement. This option provides for a benefit
     to be calculated as if you elected to retire at a previous date. If you elect the BackDROP, the monthly
     benefit payable on your actual retirement date is based on the benefit you would have been receiving
     had you left employment and retired on the BackDROP date. In addition, you will receive a lump
     sum payment equal to 90% of the Life Income Annuity amount you would have received during the
     BackDROP period, including COLA increases for that period of time.


     Eligibility
     You may be eligible for the BackDROP if you meet all the following requirements:
        • You were actively employed in a MOSERS covered position on the date you were first eligible
           for normal (unreduced) retirement.
        • You continued working in a MOSERS covered position at least two years beyond your normal
           retirement eligibility date.


     BackDROP Date
     Whatever BackDROP date you choose, it must meet both of the following requirements. It must be:
       • On or after the date you were first eligible for normal (unreduced) retirement benefits.
       • Within the five year period immediately prior to your actual retirement date.


     BackDROP Period
     The BackDROP period is the length of time between your BackDROP date and your actual retirement
     date. You may select a BackDROP period (in one year increments) ranging from one year to the total
     amount of time worked after normal retirement eligibility (maximum of five years).




18      Missouri State Employees’ Retirement System   •    PO Box 209     •      Jefferson City, MO 65102-0209
                                                                                Pre-Retirement Planning




BackDROP (continued)

  Applying for the BackDROP
  No paperwork is required when you first become eligible for normal retirement. You simply keep
  working in a benefit eligible position for at least two more years. You are not required to take any action
  related to the BackDROP until you actually retire.

  During the retirement process, you will receive a Retirement Election form. It is on this form that you
  will make your BackDROP and benefit payment option elections. Benefit estimates will be mailed
  with your election form. One will provide an estimate of your monthly retirement benefit with the
  BackDROP, and the other will estimate your monthly retirement benefit without the BackDROP.
  These benefit estimates will provide the information needed to complete your election form.


  Monthly Retirement Benefit
  If you elect the BackDROP, your monthly retirement benefit will be calculated using your final average
  pay (FAP) and creditable service as of the BackDROP date, including COLA increases during that time.

  If you do not elect the BackDROP, your monthly retirement benefit will be calculated using your FAP
  and creditable service as of your actual retirement date. You are not required to elect the BackDROP
  regardless of how long you work beyond normal retirement eligibility. It is an individual decision.




  Lump Sum Distribution Payment & Tax Implications
  If you elect the BackDROP, you must complete and submit a BackDROP Distribution form. You may
  receive your BackDROP lump sum distribution one of three ways.

  • Cash Option
    If you elect the cash option, the distribution will be paid directly to you. MOSERS is required to
    withhold 20% in federal income tax withholding. The BackDROP distribution is considered taxable
    income for the year in which you receive the payment unless you roll it over.


                                                                                BackDROP continues on next page




 Phone: (573) 632-6100 •   Toll Free: (800) 827-1063   • E-mail: mosers@mosers.org   •   Web Site: www.mosers.org   19
 Pre-Retirement Planning




        BackDROP (continued)

        If you elect the cash payment method, you may elect to receive your money in three annual
        installments (one with your first monthly benefit payment and one each of the following two
        years thereafter). Delaying receipt through the three installment option does not increase the
        amount – that is, you will not receive interest on the second or third payments.

        Tax Issue: If you receive a cash payment before you reach age 59 1/2, you may have to pay an extra tax
        equal to 10% of the taxable portion of the payment in addition to the regular income tax. The additional
        10% tax does not apply to your payment if it is (1) paid to you because you separate from service with
        your employer during or after the year you reach age 55, or (2) used to pay certain medical expenses.
        You are responsible for any state income taxes that apply.

     • Rollover Option
       If you elect the rollover option, your payment will be made directly to a traditional individual
       retirement arrangement (IRA), or if you choose, to another eligible employer plan {i.e. PEBSCO,
       403(b), 401(k), 401(a), etc.} that will accept your rollover. Your payment will not be taxed in the
       year of the rollover and no income tax will be withheld. The payment will be taxed when you take it
       out of the traditional IRA or the eligible employer plan.

     • Combination Cash and Rollover Option
       If you elect this option, you may specify the amount of your distribution to be made directly to a
       traditional IRA or another eligible retirement plan. The balance will be paid to you (less the required
       20% federal income tax withholding). You are responsible for any state income taxes that apply.

        For a detailed explanation of BackDROP payment methods, please review the Special Tax Notice
        brochure. MOSERS recommends you contact a tax consultant or financial advisor before electing a
        payment method.




20      Missouri State Employees’ Retirement System   •     PO Box 209     •       Jefferson City, MO 65102-0209
                                                                                         Pre-Retirement Planning




 Example of BackDROP
                                        Assumptions

    Plan................................................................................. MSEP 2000 (New Plan)
    BackDROP Age .............................................................. 50 years
    Actual Age ....................................................................... 53 years
    Service at BackDROP Date ............................................. 30 years
    Service Beyond Normal Retirement Date ........................ 3 years
    Final Average Pay at BackDROP Date............................. $2,000
    Final Average Pay at Actual Retirement Date ................... $2,250
    Annual COLA Rate ........................................................ 2% (will vary)


 Monthly MSEP 2000 Benefit WITHOUT BackDROP
     FAP           x      Multiplier         x        Credited Service              =             Base Benefit
    $2,250         x        .017             x            33 years                  =              $1,262.25

     FAP           x      Multiplier         x        Credited Service              =        Temporary Benefit
    $2,250         x        .008             x            33 years                  =            $594.00


 Monthly Benefit at Retirement without BackDROP                                             = $1,856.25
 (Add together base benefit and temporary benefit.)


 Monthly MSEP 2000 Benefit WITH BackDROP
     FAP           x      Multiplier         x        Credited Service              =             Base Benefit
    $2,000         x        .017             x            30 years                  =              $1,020.00

     FAP           x      Multiplier         x        Credited Service              =        Temporary Benefit
    $2,000         x        .008             x            30 years                  =            $480.00

 COLAs accrued during three-year BackDROP period                                    =                COLAs
                                                                                                     $60.60


 Monthly Benefit at Retirement with BackDROP =                                           $1,560.60
 (Add together base benefit, temporary benefit, and COLAs.)



Phone: (573) 632-6100 •     Toll Free: (800) 827-1063     • E-mail: mosers@mosers.org         •   Web Site: www.mosers.org   21
 Pre-Retirement Planning




     BackDROP Lump Sum Distribution
       • Retirement Benefits During BackDROP Period (2nd and 3rd years include 2% annual COLA)

                                           Monthly                 Annual
           1st Year Benefits                $1,500.00             $18,000.00
           2nd Year Benefits                $1,530.00             $18,360.00
           3rd Year Benefits                $1,560.60             $18,727.20

           Total Benefits                                         $55,087.20


       BackDROP Distribution (Cash Option)
            Total Benefit              x       Value          =           Lump Sum Payment
              $55,087                 x        .90           =              $49,578.48

       Lump Sum Payment               ÷        Years         =     Annual Installment Payment
          $49,578.48                  ÷          3           =             $16,526.16


       • Tax Withholding if Electing the Cash Option to Receive One Lump Sum Payment*
         $49,578.48 x .20 = $9,915.67 (20% withholding)
         $49,578.48 - $9,915.67 = $39,662.81

       • Tax Withholding if Electing the Cash Option to Receive Three Annual Installments*
         $16,526.16 x .20 = $3,305.23 (20% withholding)
         $16,526.16 - $3,305.23 = $13,220.93


       * May be subject to an additional 10% penalty on the distribution for the year you receive a cash payment, depending on
       your age at the time of your separation from service.


       Reminder:             State income tax also applies to your BackDROP lump
                             sum benefit payment as well as your monthly benefit
                             payment.




22    Missouri State Employees’ Retirement System           •       PO Box 209       •         Jefferson City, MO 65102-0209
                                                                                Pre-Retirement Planning




Cost-of-Living Allowance (COLA)
  After retirement, you will receive an annual COLA for your
  lifetime on the anniversary date of your retirement. For example, if
  you begin receiving retirement benefits in May, your annual COLA
  will be payable with your May benefit payment each year.

  MOSERS provides an annual COLA to eligible retired members,
  surviving spouses, beneficiaries, and surviving children under age
  21. The annual COLA rate will be equal to 80% of the change in
  the Consumer Price Index (CPI). The COLA rate differs between
  plans depending on date of hire.

  MSEP: Hired Before August 28, 1997
  • The annual COLA rate will not be less than 4% or more than
    5%, until the total increases equal 65% of your initial benefit (COLA cap).
  • It takes approximately 12 years to reach your 65% COLA cap.
  • After you reach 65% in accumulated COLAs, your annual COLA rate will be equal to 80% of the
    change in the CPI with an annual maximum of 5%.

     Example of calculating 65% COLA cap
     $816.00 (Initial Benefit)           x         .65 (65%)       =       $530.40 (COLA Cap)




  MSEP: Hired After August 28, 1997
  • Your annual COLA rate will be equal to 80% of the change in the CPI with an annual
    maximum of 5%.

     Example of calculating COLA rate using the CPI
     3.00% (CPI)           x      .80 (80%)        =      2.4% (COLA Rate)


  MSEP 2000
  • Your annual COLA rate will be equal to 80% of the change in the CPI with an annual
    maximum of 5%.
                                                                             A Cost-of-Living Allowance calculation is
                                                                                                 on the following page




 Phone: (573) 632-6100 •   Toll Free: (800) 827-1063   • E-mail: mosers@mosers.org   •   Web Site: www.mosers.org        23
 Pre-Retirement Planning




 Cost-of-Living Allowance (COLA) (continued)


     Effect of COLA on Temporary Benefit (Member retires at age 56)
     Annual COLA Rate May Vary

             Base Benefit                             Temporary Benefit
     $799 x 2% COLA = $815                         $376 x 2% COLA = $384
     $815 x 2% COLA = $831                         $384 x 2% COLA = $391
     $831 x 2% COLA = $848                         $391 x 2% COLA = $399
     $848 x 2% COLA = $865                         $399 x 2% COLA = $407
     $865 x 2% COLA = $882                         $407 x 2% COLA = $415
     $882 x 2% COLA = $900                   Temporary benefit ends at age 62
     $900 x 2% COLA = $918
     $918 x 2% COLA = $936
        Continues for Life




24   Missouri State Employees’ Retirement System     •    PO Box 209   •   Jefferson City, MO 65102-0209
                                                                                Pre-Retirement Planning




Death Before Retirement
  Non Duty-Related
  If you die with at least five years of credited service, a survivor benefit will be paid to your eligible spouse
  or child(ren). Although survivor benefit payments begin the first of the month following your date of
  death, they are not automatic. Each eligible benefit recipient must submit an Application for Survivor
  Benefits with the required documentation.

  The monthly benefit for your spouse will be based on the benefit you have accrued as of your date of
  death and calculated according to the Joint & 100% Survivor Option. The survivor benefit will be
  payable for the remainder of your spouse’s life.

  If there is no eligible spouse (or the spouse’s benefit is no longer payable), a total of 80% of your
  monthly base benefit will be paid to your child(ren) under the age of 21. If there is more than one
  eligible child, the benefit will be divided equally among them. The survivor benefit for each child will
  stop when the child becomes age 21 (unless a child is totally disabled).

  Duty-Related
  If you die while actively employed and your death is determined to be duty-related, your eligible spouse
  or child(ren) will receive a survivor benefit equal to the non duty-related death before retirement benefit,
  but in no event will the benefit amount be less than 50% of your average monthly compensation. In the
  event of a duty-related death, there is no minimum service requirement.

  If your death should be duty-related, an additional life insurance benefit is also available. The beneficiary
  you have designated will receive an amount equal to three times your annual salary in basic life insurance
  proceeds.




 Phone: (573) 632-6100 •   Toll Free: (800) 827-1063   • E-mail: mosers@mosers.org   •   Web Site: www.mosers.org   25
 Pre-Retirement Planning




 Basic Life Insurance
     The basic life insurance provided by the state at no cost to you is term insurance. This means your
     insurance has no cash or loan value. Furthermore, your beneficiaries will not receive a benefit payment
     if your insurance coverage through the state has been terminated or if you cease to pay the required
     premium (in special circumstances, for example, during a leave of absence).

     Before Retirement
     If you meet the criteria for eligibility, you are automatically provided basic life insurance coverage equal
     to one times your annual salary ($15,000 minimum). This amount will be payable to your designated
     beneficiary at the time of your death providing your coverage is in force at that time.
     Your basic life coverage amount will automatically be adjusted each January according to your annual
     earnings on the later of (1) July 31 of the previous year, or (2) the day after you complete one full day
     of active work as an eligible member.

     After Retirement (MSEP & MSEP 2000)
     When you retire directly from active employment (i.e. you retire the first day of the month after you
     leave state employment), the state will continue to pay for $5,000 of basic life insurance coverage.

     You have 31 days from the end of the month in which you leave state employment to make an election
     to convert the remaining basic life insurance to an individual policy through the Standard Insurance
     Company.




26     Missouri State Employees’ Retirement System   •      PO Box 209     •       Jefferson City, MO 65102-0209
                                                                                 Pre-Retirement Planning




Optional Life Insurance
 The optional life insurance provided in the MOSERS plan is “term” insurance. This means your
 insurance has no cash or loan value. Furthermore, your beneficiaries will not receive a benefit payment
 if your insurance coverage through the state has been terminated or if you cease to pay the required
 premium.

 Before Retirement
 Your premium for optional life insurance coverage will depend on your age and the amount of coverage
 you have selected. Your premium is paid through payroll deductions unless you are on an approved
 leave of absence.

 If you choose to enroll in the optional life insurance plan, you must select a flat amount in multiples of
 $10,000, not to exceed six times your annual earnings.

 The maximum amount of coverage you may choose is the lesser of six times your annual earnings or
 $800,000. The coverage amount is based upon the annual earnings in effect on your date of enrollment.
 However, if you enroll late, the coverage amount will be based on the annual earnings in effect on your
 date of coverage.

  • Spouse Coverage
     If you have optional life insurance coverage on yourself, you may elect to purchase optional life
     insurance on your spouse. You may purchase coverage on your spouse in increments of $10,000 up
     to a maximum of $100,000. However, the amount of spouse coverage may not exceed the optional
     coverage you have purchased on yourself.

 • Child(ren) Coverage
     If you have basic life insurance coverage, you may purchase optional life insurance for your
     child(ren). For purposes of determining eligibility for coverage, a child means your unmarried
     child from live birth up to age 23 who is dependent on you for support. This includes dependent
     stepchildren, grandchildren, adopted children, and children for whom you are the court appointed
     legal guardian, provided they are living with you.

     Optional life insurance coverage on your child(ren) is available in a flat amount of $10,000 per
     child. You will not be required to provide evidence of insurability for your child(ren) if you enroll
     within the initial eligibility period.

 After Retirement
 When you retire directly from active employment (i.e. you retire the first day of the month after you
 leave state employment), you may elect to continue purchasing optional life insurance. However, the

                                                                     Optional Life Insurance contines on the next page


 Phone: (573) 632-6100 •   Toll Free: (800) 827-1063   • E-mail: mosers@mosers.org    •   Web Site: www.mosers.org       27
 Pre-Retirement Planning




 Optional Life Insurance (continued)
     amount of coverage you can carry into retirement cannot exceed the amount you carried while actively
     employed. For example, if as an active employee you have $35,000 of optional coverage, you can retain
     any amount from $1,000 to $35,000 when you retire. At retirement, your premium will be deducted
     from your monthly retirement benefit.

     • MSEP
        You may elect to continue purchasing from $1,000 up to a maximum of $60,000.

     • MSEP 2000
        If you are eligible to receive the temporary benefit, you may retain all of your optional life insurance
        coverage until the temporary benefit ends (currently age 62). When the temporary benefit ends,
        your coverage will automatically reduce to $60,000.

     • MSEP & MSEP 2000: Spouse and Child(ren) Coverage
        The optional life insurance coverage on your spouse and child(ren) cannot be continued into
        retirement. However, the coverage can be converted to an individual policy with the Standard
        Insurance Company.

     Important Points to Remember
     Detailed information about your life insurance program can be found in the MOSERS Life Insurance
     Handbook. Some points to remember are:

     • To Retain Coverage (after retirement):
        • Complete an Application for Retiree to Retain Optional Life Insurance.
        • You cannot increase your coverage amount after retirement; you may decrease or drop coverage
          at any time.

     • To Initiate or Increase Coverage (before retirement):
        • You must submit an application and medical history statement to apply for increased coverage.
          The medical history statement is completed by the member (does not require a physical).
        • The carrier will contact you directly if more information is needed to prove insurability.
        • Acceptance is not automatic.
        • Allow enough time (usually three to four months) to complete application process.

     Life Insurance Beneficiaries
     • Primary Beneficiary - the person or organization recognized first to receive your life insurance
        proceeds.

     • Contingent Beneficiary - alternate beneficiary in the event the primary beneficiary precedes you
        in death.

28      Missouri State Employees’ Retirement System   •    PO Box 209     •       Jefferson City, MO 65102-0209
                                                                               Pre-Retirement Planning




 Effect of Reemployment
 Private Sector or Public Sector Position (Not a State Position)
 You may work in the private sector or in a public sector position (i.e. city, county, school district, etc.),
 but not a state position while continuing to receive a retirement benefit. Your monthly benefit from
 MOSERS will continue while you are working.


 State Position Not Eligible for Benefits
 You may work for the state in a position not eligible for benefits and continue to receive a retirement
 benefit from MOSERS. You will accrue no additional service credit.


 Benefit Eligible State Position Except MPERS
 You may work for the state in a benefit eligible position, except a position covered by the MoDOT and
 Patrol Employees’ Retirement System (MPERS). Your MOSERS retirement benefit will stop while you
 are working, but you will accrue additional service credit during the period of reemployment. When
 you later leave employment , your previous retirement benefit will resume. An additional benefit will
 be calculated based on the reemployment period, and you will receive the sum of the separate benefit
 amounts.


 MPERS Position
 If you work in a position covered by MoDOT and Patrol Retirement System, your benefit will stop for
 the period of reemployment. If you retired under the MSEP, you will receive no additional service credit
 for the period of reemployment. If you retired under the MSEP 2000, you will accrue additional service
 credit during the period of reemployment.




Phone: (573) 632-6100 •   Toll Free: (800) 827-1063   • E-mail: mosers@mosers.org   •   Web Site: www.mosers.org   29
 Pre-Retirement Planning




 Newsletters




 MOSERS publishes two newsletters - PensionsPlus for active members and RetireeNews for retired
 members. Both newsletters are produced four times a year. Newsletters are mailed directly to your home,
 unless you choose to receive them electronically by email. To make this selection, log on to our web site at
 www.mosers.org. Sign on to your personal information using your username and password. Click on “email
 preferences” in the lower right-hand corner of the page. You may then select to receive your newsletters in
 an email (plain text or html format).




30     Missouri State Employees’ Retirement System   •   PO Box 209     •       Jefferson City, MO 65102-0209
                                                                               Pre-Retirement Planning




Additional Educational Workshops
 Money Matters Workshop
  •   How can you afford to put a child through college?
  •   Is home ownership for you?
  •   How much life insurance should you have?
  •   How do you get your credit under control?
  •   How can you save for your future goals and still have money for things you need now?

 If you are asking yourself these questions, then enroll in a Money Matters Workshop! The content is
 very basic for the state employee without financial planning experience. This information will be most
 valuable to members in their 20s, 30s, and 40s; however, anyone is welcome to attend.

                          Time:       8:30 a.m. – noon

                                      This workshop is free.

               Registration:          For a schedule and registration form,
                                      • Visit www.mosers.org.
                                      • Call MOSERS at (800) 827-1063.

 BENEFIT BASICS Workshop
  •   What are your MOSERS benefits?
  •   What happens if you are laid off or change jobs?
  •   What benefits are available to you right now?
  •   What happens to your MOSERS benefits if you leave state employment before retirement?

 If you have family members or co-workers who are asking themselves these questions, encourage them
 to enroll in a Benefit Basics Workshop now! This information is for those in the early stages of a career
 in state service and will give participants a head start on the future. This information will be most
 valuable for members with less than ten years of service.

                          Time:       8:30 a.m. – 10:30 a.m.

                                      This workshop is free.

               Registration:          For a schedule and registration form,
                                      • Visit www.mosers.org.
                                      • Call MOSERS at (800) 827-1063.



Phone: (573) 632-6100 •   Toll Free: (800) 827-1063   • E-mail: mosers@mosers.org   •   Web Site: www.mosers.org   31
 Pre-Retirement Planning




 When To Contact MOSERS
     During your retirement, please let MOSERS know if your:

     •   Name or address changes.
     •   Spouse or beneficiary dies (for Pop-Up provision or beneficiary changes).
     •   Tax withholding changes.
     •   Direct deposit changes (bank, account number).


         Contact us:
         Missouri State Employees’ Retirement System

         Mailing Address:                              Office Location:
         PO Box 209                                    907 Wildwood Drive
         Jefferson City, MO 65102-0209                  Jefferson City, MO 65109

         Phone:                                        Toll free:
         (573) 632-6100                                (800) 827-1063

         MO Relay:
         (800) 735-2466 (Voice)
         (800) 735-2966 (TDD)




32       Missouri State Employees’ Retirement System   •     PO Box 209   •      Jefferson City, MO 65102-0209
                                                                               Pre-Retirement Planning




   Notes




Phone: (573) 632-6100 •   Toll Free: (800) 827-1063   • E-mail: mosers@mosers.org   •   Web Site: www.mosers.org   33

				
DOCUMENT INFO
Description: Pre Retirement Workbook document sample