1 An Overview of MainePERS for Maine Association of Police October 28, 2008.

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An Overview of MainePERS for Maine Association of Police

October 28, 2008

Maine Public Employees Retirement System

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Defined Benefit Plan

Disability

Pre-Retirement Death Benefitsordinary death

accidental death

Group Life Insurance

Additional Service Credit

Purchasable Service

Service Retirement Plan/Benefit Calculation

Deferred Compensation Plans

Presentation Overview


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What is a Defined Benefit Plan and what does one provide?

A retirement benefit that is sponsored by the

Employer

Retirement eligibility that is defined by the

employee’s age and/or years of service

A defined payment amount based on length of

service and final average salary

A retirement benefit that is permanent and

guaranteed


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MainePERS Terms

Creditable Service

A factor in the calculation of service retirement benefit

Service Rendered

Additional Service Granted

Service Purchased


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MainePERS Terms (continued)

Earnable Compensation

Salary/wages paid for services rendered

Hourly Wage

Differential Pay

Overtime Pay

Longevity Pay

Common exclusions

Bonuses

Accrual cash ins

Expense Reimbursements or Allowances

(phone/clothing)


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MainePERS Terms (continued)

Cost-of-Living Adjustment (COLA)

Annual increase or decrease in retirement benefits

Based on Consumer Price Index

Capped at 4% per year

Granted in September each year once eligible


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MainePERS Disability Program

Members who have a long-term disability who are found eligible, receive a disability retirement benefit.

Creditable Service continues to accrue until return to employment or the point at which you change over to a service retirement.

To be eligible you must show that you have a permanent physical or mental incapacity.

Other eligibility requirements are available at www.mainepers.org or by calling the Disability Unit.

One of the benefits available to members of MainePERS is the disability retirement program.


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Pre-Retirement Death Benefits

Ordinary Death Benefits

Separate from Group Life Insurance benefits

Benefit choices offered to your beneficiary(ies) depends on:

Your status as a member at the time of death Your relationship to your beneficiary(ies)

Benefit choices offered may include the following: Lump Sum Refund of Accumulated contributions Survivor Benefits (if applicable) Automatic Option 2 (if applicable)


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Pre-Retirement Death Benefits (continued)

Accidental Death Benefits

Death is the result of a job-related injury

Apply only if your beneficiary(ies) are: A surviving spouse and/or Dependent children

A dependent child is: Unmarried and under Age 18; or Unmarried and under Age 22 if a full-time

student; or Any mentally or physically incapacitated progeny


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MainePERS Group Life Insurance Program

Basic coverage:Annual gross compensation

Supplemental coverage: One, two or three times basic

Dependent coverage: Up to $10,000 of coverage on spouse Up to $5,000 each dependent child

Group Life Insurance Coverage is a separately funded program, administered by MainePERS and coverage levels include:


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Additional Service Credits

You may receive credit for up to 5 years of military service

To be eligible, you must meet all other eligibility requirements

You must not withdraw your MainePERS Contributions

You must provide MainePERS with a copy of your military discharge papers upon your return from leave

Military Leave of Absence

You earn a maximum of 30 days a year of creditable service during unpaid leaves of absenceUnpaid Leave of Absence


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Additional Service Credits (continued)

Service credit for up to 90 days of unused, uncompensated sick and/or vacation leave accumulated as of final termination of MainePERS-covered employment

For this purpose, a day equals 8 hours

You cannot use accumulated “comp” time for this purpose

Using Unpaid Sick or Vacation Leave Accruals For Retirement

Creditable service continues to accrue

You are required to pay MainePERS contributions on any earnings you receive for lost wages

MainePERS will deduct any contributions not paid, with interest, from any future service retirement benefit

Workers’ Compensation


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Purchasable Service Credits

Types of service credit available for purchase (subject to

eligibility):

Active-Duty Military Service prior to MainePERS membership

Previously refunded MainePERS-service

CETA

Out of State Service

Non-Contributory Service

Please contact the PLD Unit to inquire about eligibility requirements, costs and our flexible payment methods for purchasing service credit.


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Service Retirement Plan

Members with 25 years of creditable service as an active or inactive MainePERS-member are eligible to retire. Retirement benefits for members who retire with 25 years of service before Normal Retirement Age are reduced for early retirement

Members who reach normal retirement age as an active member and have accrued at least 1 year of service credit immediately prior are eligible to retire

Members who reach normal retirement age as an inactive member are eligible to retire if vested

Employee contribution rate is 6.5% of gross earnable compensation

The Plan may or may not include COLA

PLD Member Regular Plan “A”


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Benefit Calculation

Calculated using the three highest years of earnings

All earnable compensation is considered when determining the three highest years

PLD members may use up to 30 days worth of lump sum payment for unused vacation/ sick leave accruals in the calculation of the AFC. This is only for payments made at the member’s final termination from MainePERS- covered employment

Average Final Compensation (AFC)


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AFC Calculation

AFC EARNINGS SERVICE EARNABLE AFCYEAR YEAR DAYS COMPENSATION CALCULATION

1 2006 360 65,107 65,107

2 2007 360 66,942 66,942

3 2008 360 67,945 67,945

Total 199,994

÷ 3

66,664.67

Example: Member is a full time employee and retired effective January 1, 2009.


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Benefit Determination

AFC: $66,664.67Creditable Service: 25 yrsNormal Retirement Age 60

AFC $ 6,664.67

÷ 50 $ 1,333.29

Years of Creditable Service x 25Yearly Full Benefit at Normal Retirement Age $ 33,332.33

Monthly value: $ 2,777.69


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Early Retirement

The percentage of the service retirement allowance of a PLD member payable upon early retirement with 25 or more years of creditable service before normal retirement age shall be determined from the following table:

Normal retirement age: 60

Age at % of Service Retirement Retirement Allowance

59 97.2%58 94.5%57 92.0%56 89.7%55 87.4%54 85.3%53 83.3%52 81.4%51 79.6%50 77.9%49 76.3%48 74.8%47 73.3%46 71.9%45 70.6%44 69.4%43 68.2%42 67.0%41 65.9%40 64.9%

Note: If you are within six months of your next birthday on your retirement day, we will consider you to be the age that will be attained on your next birthday when calculating your benefit.


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Special Service Retirement Plans

A Special Plan typically permits a member to retire earlier than a Regular Plan or entitles the member to a higher benefit accrual.

A PLD may adopt a Special Plan to be applicable to all current service with that PLD or for future service only. The cost to convert all current service to an enhanced Retirement Plan (i.e. Special Plan) is paid entirely by the employer.

A PLD may select one of four Special Plans for a

specific classification of employees.

If a member will receive a higher benefit under the provisions of a Regular Plan at the time of retirement versus the Special Plan, the higher benefit from the Regular Plan will be granted.


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Special Plan 1

Eligible to retire after 20 years of qualifying special plan service, with no reduction in benefit due to age.

1/50 or 2.5% per year accrual for membership service. (20 years = 50% AFC)

Additional 2% of AFC for each year of eligible service beyond 20 years

6.5% employee contribution rate

COLA/No-COLA


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Special Plan 2


1/50 or 2% per year accrual for membership service. (25 years = 50% AFC)


6.5% employee contribution rate

COLA/No-COLA


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Special Plan 3


2/3 or 2.667% per year accrual for membership service. (25 years = 2/3% AFC)


8% employee contribution rate through 25 years, 6.5% after 25 years

COLA/No-COLA


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Special Plan 4

Eligible to retire after 25 years of qualifying special plan service, with an age requirement of 55.

1/50 or 2% per year accrual for membership service. (25 years = 50% AFC)


Approximately 2-1/4% per-year reduction for early retirement (prior to age 55)

7.5% employee contribution rate through 25 years, 6.5% after 25 years

COLA/No-COLA


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Conversion Process Between Regular Plan A Service and Special Plan 2 Service

A member who has accrued service credits under a Regular Plan may use those service credits at the rate of three years of Regular Plan service as two years of service credit toward qualifying to retire under Special Plan 2, 3, or 4. (The conversion of service from a regular plan to special plan 1 is 1:2)

Example:At age 35 an officer with 10 years of regular plan service moves to special plan 2. (If continued under plan A he would qualify to retire @ age 50 with 25 years of service and the benefit would be reduced for age.)

The 10 years of Regular Plan service converts to 6 years and 8 months of service under Special Plan 2 for retirement qualification purposes. He must work another 18 years and 4 months under special plan 2 to qualify to retire under the special plan. He retires at age 53 with no reduction in benefit for age.

Special plan calculation-- based on an AFC of $50,000, annual benefit =$25,000. or,

Split calculation-- based on each plan and reducing the regular plan portionof benefit for age, annual benefit = $23,573.


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Changing Special Plans

Moving from Special Plan 2 to Special Plan 1 for future service only-- What happens to the service already accrued under Special Plan 2?

Service previously rendered under another Special Plan is transferred to the new plan for qualification purposes, based on the percentage of eligibility of the previous plan met while under that plan. (See pages 11 - 13 of the PLD Member Handbook for more information on the conversion process.)

Example: 12.5 years of service under special plan 2= 50% of the eligibility for that plan. Upon transferring to Special Plan 1 the member only needs to complete 50% of that plan; i.e., 10 more years of service to qualify to retire.


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Employment Changes That May AffectYour MainePERS Benefits

Before leaving your current employer, consider the new employer for whom you will be employed.

Is the new employer part of MainePERS? If so, under which group? State, Teacher or PLD?

If the employer qualifies as a local district, are they a PLD?

Is your new position with your new employer, or current

employer, covered under MainePERS?

If considering a position that is covered under the State or Teacher group, how will that affect your MainePERS service retirement benefit and disability benefit coverage?


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Retirement Process

When you are ready to retire…

Choose a retirement date

Request a Benefit Calculation Estimate 6 to 12 months prior to retirement

Review your estimate, then call MainePERS to: Schedule an appointment to attend a Retirement

Counseling meeting (recommended) or Request a Retirement Application Packet

Review your Retirement Application packet

Select a Benefit Payment Option

Complete your Retirement Application and file it with the Retirement System

(Applications are accepted up to 12 months prior to your retirement date but should be filed at least 30 days before.)


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Benefit Payment Options

When you retire, you will need to select one of the nine benefit payment options available

Full benefit option – maximum benefit, no beneficiary after retirement

Benefit payment options 1 through 8 – reduced benefits, each option offers a different way to provide for a beneficiary or beneficiaries after retirement

For married retirees, a certified Spousal Notification is required if the full benefit option or any other option is selected and the spouse is not named as the beneficiary


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What is MaineSTART?

Low cost investment options

Easy investment selection

MainePERS Board of Trustees’ oversight

Coordinated retirement savings

MainePERS 457 Deferred Compensation Program

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Thank you for attending today's session! If you have additional questions,

please contact us.

Telephone: (207) 512-3100Toll free: 800-451-9800

TTY: (207) 512-3102


46 State House StationAugusta, ME 04333-0046

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1 An Overview of MainePERS for Maine Association of Police October 28, 2008.

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