RETIREMENT & BENEFIT SERVICES DIVISION MEMORANDUM
August 21, 1998
TO THE HEADS OF ALL STATE AGENCIES
ATTENTION: |
Personnel and Payroll Officers |
SUBJECT: |
General Provisions to Purchase Retirement Credit in Tier IIA of the
State Employees Retirement System |
- Introduction
Most State employees first hired on and after July 1, 1997 join Tier
IIA, the State Employees Retirement System's (SERS) newest defined
benefit plan. Employee contributions are required in Tier IIA at a
rate of 5.0% of salary for hazardous duty members and 2.0 % of salary
for all other Tier IIA members. Generally, retirement credit accrues
for Connecticut state service while the Tier IIA member is actively
employed and making the required retirement contributions to SERS.
Tier IIA members may also obtain additional retirement credit or
reinstate retirement credit. The additional retirement credit
provisions resemble those contained in Tier II, the mostly
non-contributory plan that covers the majority of employees hired
from July 2, 1984 through June 30, 1997. However, in order for Tier
IIA members to obtain additional retirement credit, they must purchase
the retirement credit by paying required contributions and statutory
interest.
The intent of this memorandum is to provide:
- detailed information with respect to the general retirement credit
purchase opportunities available to Tier IIA members, and
- guidance on the use of the new forms:
CO-1088, entitled "Retirement Credit Purchase Request for Prior
Miscellaneous Service - Tier IIA Members Only"; CO-1089, entitled "Retirement Credit Restoration Request -
Reemployed Tier IIA Members Only"; CO-1090, entitled "Retirement Credit Purchase Request for
Qualifying Leaves Without Pay - Tier IIA Members Only".
Copies of the new forms are attached hereto.
Section II of this memorandum is devoted to a detailed description of
the purchase opportunities and addresses eligibility requirement and
cost factors. Section III provides instructions for use of the new
Tier IIA purchase request forms.
The cost to Tier IIA members for all purchases represent post tax
dollars. These purchase provisions do not have deadlines associated
with them except as specified herein with respect to military service.
- Description of Tier IIA Purchase Opportunities
- Miscellaneous Service Credit - Other than Connecticut state
employment
When an employee joins Tier IIA, there are three types of prior service
that may be purchased for retirement credit assuming all requirements
are met.
- Prior active duty military service: A Tier IIA member is eligible
to purchase vesting and credited service for active duty military
service during war-time or national emergency in the United States
Army, Navy, Marine Corps, Coast Guard or Air Force for which they
received an Honorable Discharge, provided the member has not received
and will not receive a pension from another source for the same
service. However, the member must apply to purchase prior military
service within one year of the date he/she first commenced Connecticut
state service as a Tier IIA member or December 31, 1998, whichever is
later. The purchase must then be completed by remitting the sum due
within the time frames provided on payment notices.
The cost to the Tier IIA member to purchase each year of qualifying
military service will equal four percent of the annual full-time rate
of compensation when first hired into Connecticut state service plus
a five per cent interest charge per year from the date such service
was rendered to date of purchase.
A Tier IIA member is limited to receiving retirement credit for
military service equal to war-time service plus three years of
national emergency service. In any event, a Tier IIA member may
not obtain more than ten years credit in the aggregate for all
military service.
- Prior full-time employment with another state: A Tier IIA member
is eligible to purchase vesting and credited service for active
full-time employment with another state, provided the member has not
received and will not receive a pension from another source for the
same service, and the other state makes similar retirement credit
provisions for former Connecticut state employees.
The cost to the Tier IIA member to purchase each year of qualifying
service with another state shall be six per cent of the annual
full-time rate of compensation when first hired into Connecticut state
service plus a five per cent interest charge per year from the date
such service was rendered to date of purchase.
A Tier IIA member is limited to receiving ten years credit in the
aggregate for all service to other states, and not more than one year
of this type of service shall be counted for each two years of credited
Connecticut state service.
- Prior Connecticut municipal employment: A Tier IIA member is
eligible to purchase credited service for a prior period of municipal
service during which he/she was a member of the Connecticut Municipal
Employees Retirement System (CMERS), provided the member has not
received and will not receive a pension from another source for the
same service.
The cost to the Tier IIA member to purchase each year of qualifying
municipal service will equal the employee's contributions to CMERS
plus a five per cent interest charge per year from the date such
service was rendered to date of purchase.
Purchased municipal service cannot be added to the Tier IIA member's
credited service until said member has at least ten years of vesting
credit, exclusive of such municipal service.
- Restoration of prior Tier IIA vesting and credited service
A former member of Tier IIA who is reemployed before a permanent break
has occurred may restore retirement credit for their prior Tier IIA
vesting and credited service for which retirement contributions and
interest were withdrawn. A permanent break in service occurs if there
is a break in service, the individual is not vested, and the period
from severance from service date to reemployment commencement date
equals or exceeds the Tier IIA vesting service prior to that severance,
or five years, whichever is greater.
Usually, the cost to the Tier IIA member to restore retirement credit
shall equal the full amount of the withdrawal plus interest at the
rate of five percent per annum calculated from the date of withdrawal
to date of restoration. In the event that a Tier IIA member
contributing at the non-hazardous duty rate (2%) is restoring
retirement credit for prior hazardous duty service (5%), the cost of
the restoration is adjusted.
- Leaves of absence without pay
As a general rule, leaves of absences without pay will diminish the
Tier IIA member's vesting and credited service unless it is the type
of leave that can be purchased for retirement credit, and the employee
completes such purchase. There are two exceptions to this rule:
retirement credit is awarded "free" to the employee for leaves during
which the individual is receiving qualifying temporary Workers'
Compensation or Disability Compensation or leaves taken in accordance
with Connecticut General Statutes, Section 5-248c entitled "Voluntary
schedule reduction program".
The following types of leaves without pay can be purchased for vesting
and credited service:
- For personal or family illness: A Tier IIA member may purchase
vesting and credited service for leaves granted for the protection or
improvement of the member's health, leaves granted pursuant to C.G.S.,
Section 5-248a, entitled: "Family and medical leave from employment"; or
leaves granted for family illness or eligible parental leave as
provided in an applicable collective bargaining agreement.
The length of such leaves is an important factor in determining a Tier
IIA member's right to obtain retirement credit as well as the cost to
the individual.
Qualifying leaves of thirty calendar days or more are purchasable in
one month increments. As an example, if a member is on a leave without
pay for a period of sixty-three consecutive calendar days, sixty days
of such leave are purchasable. In the case of such leaves without pay
of a month or more, the contributions required from the member will be
two percent or five percent, whichever is applicable, of his monthly
salary at the time such leave was taken with five percent interest per
year from the period of the leave to the date of the purchase.
Members may also purchase qualifying leaves of absences without pay,
each of which is less than thirty consecutive calendar days in
duration, if the cumulative total of individual working days equals
one month. In such case, one month is considered to be a total of
twenty-two working days. If the purchase is composed of several
leaves totaling one month, the cost to the member will be two or five
percent, whichever is applicable, of the daily rate of salary at the
date of application to receive credit, multiplied by twenty-two
without an accompanying interest charge.
Not more than fifteen months of vesting and credited service in any
five year period may be obtained in combination for personal illness,
family leave and parental leave.
- For military service: A Tier IIA member may purchase vesting and
credited service for a leave without pay during which said member
served in the Armed Forces as described in Section II-A-1 in this
memorandum provided there is a return to state service within ninety
days of honorable release from active duty.
The cost to the Tier IIA member to obtain the retirement credit will
equal two percent or five percent, whichever is the applicable
contribution level, plus five percent interest per annum from the
period of the leave to the date of the purchase.
For retirement purposes, not more than the war-time service plus three
years shall be counted as vesting and credited service for military
leave without pay.
- Introduction of Tier IIA Purchase Request Forms and Instructions
There are three Tier IIA Purchase Request Forms, each designed to
address retirement credit issues that may arise at different stages
in the Tier IIA member's career. These forms should be copied for
use until they are available from Vanguard Direct which will take
approximately three weeks from the date of this memorandum.
- CO-1088 entitled "Retirement Credit Purchase Request For Prior
Miscellaneous Service-Tier IIA Members Only". Every Tier IIA
member of the State Employees Retirement System hired prior to
September 1, 1998 must complete a Form CO-1088 and the form
should be processed in accordance with the directions on it.
On the form, he/she must apply to purchase miscellaneous service
which was rendered prior to the commencement of Connecticut
state service and sign the "Member's Request", or acknowledge
that the form has been read by signing the "Member's
Acknowledgment".
On and after September 1, 1998, each newly hired employee's Form
CO-931 sent to the Retirement & Benefit Services Division must be
accompanied by a Form CO-1088.
- CO-1089 entitled "Retirement Credit Restoration Request -
Reemployed Tier IIA Members Only". The reemployed Tier IIA member
must make application on Form CO-1089 to restore retirement credit
for prior service for which the member received a refund of
retirement contributions.
- CO-1090 entitled "Retirement Credit Purchase Request for
Qualifying Leaves Without Pay - Tier IIA Members Only".
It is imperative that all retirement credit purchase request forms be
submitted to the Retirement & Benefit Services Division with the
required documentation listed on said forms. When the purchase
application is completed for submission to the Retirement & Benefit
Services Division, the agency should retain a copy of the form in the
individual's personnel file.
Assuming that the eligibility to obtain credit is established, an
invoice will be sent to the member reflecting the cost to obtain
the credit. Any available payment options will be presented along
with instructions to the member on how to complete the purchase.
- Summary
Purchase opportunities are available only to active and vested
members of Tier IIA, not retirees or any other payees.
In the processing of requests from active Tier IIA members,
agency personnel may call the Retirement Credit Purchases Unit
at (860) 702-3511 or (860) 702-3512 with questions that may
arise.
The Division plans to issue a check enclosure for current Tier
IIA members, advising them of the limited window of opportunity to
purchase prior military service, and the need to complete a
CO-1088, entitled "Retirement Credit Purchase Form for Prior
Miscellaneous Service - Tier IIA Members Only". Agencies will
receive advance notification of the check enclosure date.
Very truly yours,
STATE EMPLOYEES RETIREMENT COMMISSION
NANCY WYMAN, SECRETARY EX OFFICIO
BY:
Steven Weinberger, Director
Retirement & Benefit Services Division
Back to Comptroller's Home Page
Back to Index of Retirement & Benefit Services Division
Memoranda