STATE EMPLOYEES RETIREMENT COMMISSION MEDICAL EXAMINING BOARD For DISABILITY RETIREMENT		55 ELM STREET HARTFORD, CONNECTICUT 06106-1775 Telephone (860) 702-3480 Facsimile (860) 702-3489
	STATE OF CONNECTICUT
	RETIREMENT SERVICES DIVISION OFFICE OF THE STATE COMPTROLLER

RETIREMENT SERVICES DIVISION MEMORANDUM 2011-06

September 27, 2011

TO THE HEADS OF ALL STATE AGENCIES

I. INTRODUCTION

The purpose of this memorandum is to provide agencies with information concerning the on-going implementation of the changes to State Employees Retirement System (SERS) benefits provided for under the 2011 agreement between the State and the State Employees Bargaining Agency Coalition.

II. NEW SERS RETIREMENT PLANS

The 2011 SEBAC agreement provides for the implementation of two new State Employees Retirement System retirement plans.

a) SERS Tier III

 

State employees first hired on or after July 1, 2011 will become members of the new SERS Tier III retirement plan unless they are employed in a position statutorily defined as a state teacher or a professional staff member in higher education and consequently eligible to choose membership in another state retirement plan.

 

Due to the delay in ratifying the 2011 agreement, the Retirement Services Division (Division) is in the process of making the changes necessary to implement this new retirement plan. Employees hired from July 1, 2011 through the date with which updated enrollment forms and Core-CT payroll codes become available should be placed in the Tier IIA retirement plan except that individuals employed in a position statutorily defined as a state teacher or a professional staff member in higher education may elect to choose undecided until such time as information is available to enable them to compare and choose between the retirement plans available to them.

 

Following completion of the updated enrollment forms and Core-CT payroll codes, the Division will notify agencies of the steps necessary to enroll such employees in the new plan. Of note, the retirement plan contributions required for Tier III retirement plan members will be the same as those currently required for Tier IIA membership so no retirement plan contributions adjustments will be required for such employees.

For individuals employed on or after July 1, 2011 in a position statutorily defined as a state teacher or a professional staff member in higher education who choose to remain undecided, their election of membership in a SERS retirement plan will be retroactive to the date of their employment.

 

b) SERS Hybrid Plan

 

Employees first hired on or after July 1, 2011 in a position statutorily defined as a state teacher or a professional staff member in higher education are eligible to choose membership in the SERS Tier III retirement plan, the Alternate Retirement Program, the SERS Hybrid retirement plan or, if eligible, the Teachers Retirement plan within 90 days of their employment. The Hybrid Plan is a defined benefit plan that provides members hired on or after July 1, 2011 with a life-time benefit the same as benefits provided under Tier III with the option at the time of retirement to elect to receive a lump sum payment of their contributions with a five percent employer match and four percent interest in lieu of a defined benefit.

 

As indicated above, such individuals may elect to remain undecided until such time as information is available to enable them to compare and choose between the retirement plans available to them. Their subsequent election of membership in a SERS retirement plan will be retroactive to the date of their employment and they will be given the opportunity to make payment of any mandatory contributions due as a result of their retroactive enrollment through the Division?s mandatory retirement contributions payroll deduction program.

III SERS PLAN CHANGES EFFECTIVE OCTOBER 2, 2011

There are two changes to SERS retirement plan provisions that become effective October 2, 2011. They are:

a) SERS Retirees Cost of Living Adjustments

 

All SERS members who retire on or after October 2, 2011 will receive a cost of living adjustment calculated based on the current formula ranging from a minimum of 2% to a maximum of 7.5%. As SERS members retire on the first of the month, this will affect all retirements effective on and after November 1, 2011.

 

b) SERS Tier II/Tier IIA Early Retirement Reduction Factor

 

SERS Tier II and Tier IIA members who retire on or after October 2, 2011 before meeting the age and service requirements for a normal retirement, age 60 if you have 25 or more years of vesting service or age 62 if you have 5 years of actual state service or 10 years of vesting service, will be subject to an early retirement reduction of one half of one percent (.005) for each month they retire prior to attaining age 60 or age 62. Again, this change will affect all SERS Tier II and Tier IIA retirements effective on and after November 1, 2011.

Please note: the early retirement reduction factor change has been incorporated into the SERS Tier II/Tier IIA benefit estimator on the Office of the State Comptroller's website.

IV. ARP MEMBERS TRANSFER TO HYBRID PLAN OPPORTUNITY

The 2011 SEBAC agreement also provides employees who are members of the Alternate Retirement Program with a one-time, irrevocable opportunity to elect to transfer their membership from ARP to the new SERS Hybrid Plan and purchase, at the full actuarial cost, their prior ARP service in this plan. The Division is in the process of implementing this provision and will provide agencies and affected employees with the appropriate forms and instruction as soon as they are finalized.

V. CONCLUSION

This memorandum is not meant as a comprehensive review of the changes to SERS retirement plan provisions provided for in the 2011 SEBAC agreement. Rather, it addresses the most immediate and time sensitive concerns. The Division is in the process of revising forms, revising and drafting summary plan descriptions and implementing processes for the administration of this agreement and will continue to provide agencies with information as it becomes available.

Questions you have concerning the changes discussed herein may be addressed to Jeanne A. Kopek, Assistant Director, at 860-702-3487.

Very truly yours,

STATE EMPLOYEES RETIREMENT COMMISSION
KEVIN LEMBO, SECRETARY EX OFFICIO

BY:

Brenda K. Halpin, Director
Retirement Services Division

BKH/JAK

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