Retirement Services Division - SEBAC 2011 ARP to SERS Hybrid Plan Transfer Program

The purpose of this memorandum is to 1) notify agencies of the procedures now in place in connection with the provision of the 2011 agreement between the State and the State Employees Bargaining Agency Coalition (SEBAC) which allows participants in the Alternate Retirement Program (ARP) employed prior to July 1, 2011 a one-time irrevocable option to transfer their membership from ARP to the State Employees Retirement System (SERS) Hybrid Plan and 2) advise agencies of the changes pursuant to a supplemental SEBAC agreement in the required employee retirement contributions for employees who choose to avail themselves of this opportunity.

Although the information in this memorandum is being provided to all state agencies, this transfer opportunity is limited to ARP participants employed in higher education agencies.

ARP participants who choose to transfer to the SERS Hybrid Plan under the SEBAC 2011 provision will be required to pay the full actuarial cost of joining the SERS Hybrid plan and receiving credit for their eligible prior Connecticut state service. The benefit which such participant will receive from the SERS Hybrid Plan will be the same as that payable under the SERS Tier II or Tier IIA retirement plan dependent upon the individual's date of employment.

The required forms as well as cost estimators and other important program information including the information provided to agencies herein are currently available to employees on the Office of the State Comptroller's (OSC) website under Employee Resources or by clicking on the following link: http://osc.ct.gov/rbsd/arptransfer/disclaimer.htm Agencies should encourage employees to access the information on the OSC website before completing the form(s) required to initiate such transfer.

All current, active ARP participants who were employed prior to July 1, 2011 are eligible to participate in this program.

Any ARP participant who was employed prior to July 1, 2011, was actively employed on July 1, 2011 and retired or terminated with vested benefits prior to July 1, 2012 is also eligible to participate in this program but must apply for this transfer by September 1, 2012.

The "window" for active ARP participants choosing to transfer from ARP to the SERS Hybrid Plan will be open until 90 days following a ruling by the Internal Revenue Service (IRS) on the SEBAC ARP Grievance (SAG) Award. Information concerning the SAG Award is available on the Office of the State Comptroller's (OSC) website, osc.ct.gov. There is currently no specific deadline for participation in this program for active ARP participants.

Following the receipt of information from the IRS on the SAG Award, the Retirement Services Division will notify state higher education agencies and affected ARP participants of any action necessary. ARP participants should be aware that the cost of their transfer will be determined at the time they apply and will likely be greater if they apply in the future.

Otherwise eligible ARP participants who terminated or retired subsequent to July 1, 2011 and before July 1, 2012 must apply for this transfer by September 1, 2012.

Eligible employees will receive credit for all prior state service during which they participated in ARP. Any period(s) of leave of absence without pay creditable under the SERS Hybrid Plan provisions will be included in the cost.

Prior SERS service is not creditable under this program. If an employee has prior service during which they made contributions to SERS Tier I or Tier IIA but are not vested in SERS, that employee will be provided with a refund of those contributions along with interest to the date of refund, following the Division's receipt of the properly completed transfer form(s).

If an employee is a current ARP participant but is vested in SERS as a result of prior service during which they were a member of Tier I, Tier II or Tier IIA, that employee is not eligible to participate in this program.

The purchase cost must be paid first from the employee's ARP monies, with the exception of any funds in the TIAA Traditional Fixed Account also known as "encumbered funds". Participating employees have the option to use or not use their encumbered funds to pay the purchase cost. If an employee chooses to use their encumbered funds, all such funds will be exhausted first and payments will be made from those funds over a multiple year period as required for withdrawal of those funds. However, since these payments will be made over an extended period of time, a discount (interest) rate will be applied to those funds.

The discount rate chart for these encumbered funds and examples of how that rate will affect a participating employee's purchase cost and payments is available on the OSC website.

Employees who do not have sufficient funds in the ARP to pay the full cost of their purchase of prior service may use monies from their Section 457 deferred compensation plan or Section 403(b) retirement savings plan. All ARP funds with the exception of encumbered funds only must be exhausted before using Section 457 or 403(b) monies.

Once an ARP participant has elected to become a SERS Hybrid Plan member they may apply to purchase service credit in that plan for any miscellaneous service, such as prior military service, for which they are eligible under the provisions of the SERS Hybrid Plan.

Employees who choose to transfer to the SERS Hybrid Plan all become members of the same retirement plan.

The basic retirement plan provisions are the same for all Hybrid Plan members. Certain provisions of the Hybrid Plan are however based on the member's date of employment or participation in the ARP. The differences are mainly with respect to the amount and type of employee contribution required and the age and service retirement eligibility requirements. The benefit calculation formula is the same for all members.

For the purposes of employees who are eligible to participate in this transfer program, the Tier II/IIA counseling workshop and benefit estimator may be used to provide estimated benefits available under this program.

Again, eligible ARP participants should be encouraged to access and review all the information on the OSC website before completing the form(s) required to initiate a transfer.

Eligible ARP participants are required to obtain an estimate of the cost to purchase their prior service credit using the cost estimator on the website (HYPE). A copy of the estimate will be required by this Division in addition to a completed Form CO-994, "SEBAC 2011 Option to Transfer from the Alternate Retirement Program to the State Employees Retirement System Hybrid Plan".

If the participant chooses to transfer they must first take the necessary action to transfer all of their ARP funds, including those on deposit with TIAA-CREF with one exception, to the ING Stable Value Account. After the transfer, the participant must obtain a copy of a current statement of that account and submit the account statement with a completed CO-994 form. Exception: participants with monies in the TIAA Traditional Fixed Account, also known as encumbered funds, are not required to use these funds for payment of their Hybrid Plan service purchase. If the participant does choose to use encumbered funds, they must take the necessary action to begin the transfer of these monies to the ING Stable Value Account as well and also complete a Form CO-995, Application for Use of Encumbered Funds for Hybrid Plan Transfer.

Employees must have form CO-994 signed by the appropriate agency human resources staff and both CO-994 and CO-995, if needed, must be notarized.

Agency human resources staff will need to assist employees in compiling their years and months of state service and/or highest annual compensation for the calculation of their service purchase costs. Employees who are close to the age of retirement may also wish to obtain an estimate of the retirement benefit to which they would be entitled under the SERS Hybrid Plan and will require assistance in compiling the average of their three highest years earnings as well. As stated earlier in this memorandum, in this circumstance, the online Tier II/IIA counseling workshop and benefit estimator may be used to provide such estimated benefits.

Upon receipt of a completed CO-994 form on which an ARP participant has elected to transfer to the SERS Hybrid Plan, agency staff must take the action necessary to change the participant's retirement plan membership in the CORE-CT HRMS payroll system and begin the required retirement plan contribution deductions. The agency must provide the effective date of such changes in the appropriate box in Section III of Form CO-994 and sign the form where designated.

In this connection, agencies should be aware that SEBAC and the State entered into a supplemental agreement under which all SERS Hybrid Plan members will make a required total contribution of 5%.

Consequently, a new code has been added to the Core-CT HRMS payroll retirement plan coding originally provided in memorandum 2012-01 dated January 3, 2012; all the codes for the new SERS Tier III and Hybrid Plan are as follows:

RSER3	SERS Tier III 2% Employee Contributions
RS3HZ	SERS Tier III Hazardous Duty 5% Employee Contributions
RSHY3	SERS Hybrid Plan 3%
RSHYA	SERS Hybrid Plan 2% ARP employee contribution
RSHY5	SERS Hybrid Plan 5%

ARP participants who request to transfer to the SERS Hybrid Plan whose date of employment and participation in ARP is prior to July 1, 1997 must be coded to contribute 3% to the SERS Hybrid Plan, deduction code RSHY3, plus to contribute 2% to the ARP as a SERS Hybrid Plan member. The employer contribution required will remain the same. No employer contribution will be made to the ARP in conjunction with the 2% employee contribution.

We encourage agencies to also review the information available on the Office of the State Comptroller's website concerning the ARP to SERS Hybrid Plan transfer; questions regarding the transfer program may be sent to the Retirement Services Division by email to osc.rsd@po.state.ct.us or directed to the Division's Miscellaneous Retirement Systems Unit at 860-702-3508.

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

ATTENTION:	All Human Resources and Payroll Officers
SUBJECT:	SEBAC 2011 ARP to SERS Hybrid Plan Transfer Program