Office of the State Comptroller Retirement Services Division

CMERS - Retirement Basics - Counseling Workshop on the Web

Introduction

Plan Membership

• CMERS is a contributory defined benefit retirement plan.
   
• Enrollment is mandatory if you work for a participating CMERS employer. You will be enrolled in the CMERS as soon as you meet the eligibility requirements for plan membership. If your employer has a probationary period, your date of plan membership is the day after you complete the probationary period and begin contributing to the plan.
   
• There are 2 different ?plans? or ?parts? in CMERS: one for employers covered by social security (?Part B?) and one for those not covered (?Part A?). As you go through this workshop it is important to know what ?part? you belong to as there are differences between Part A (no social security) and Part B (covered by social security) particularly with regard to social security benefits.
   
• The contributions under the Plans are as follows:
   
  • If your employment is not covered by Social Security (?Part A?) you contribute 5% of your pay.
  • If your employment is covered by Social Security (?Part B?): (a) You contribute 2?% of the portion of your pay on which Social Security taxes are withheld; and (b) You contribute 5% of the portion of your pay on which Social Security taxes are not withheld.

Your contributions pay only a small part of the cost of your retirement benefits. Your municipality makes contributions at rates set by the State Retirement Commission to fund the remaining cost. The municipality also contributes toward the administrative costs of the plan.

Eligibility Requirements for Retirement

• Eligibility for a retirement benefit is determined by the length of time you actively work for a CMERS participating municipality and whether that service was continuous. Continuous active service is when you: (1) are working for a participating municipality, (2) are contributing to CMERS and (3) have no periods of unpaid absence in excess of 90 days in one calendar year.
   
• Benefits can only commence on the day after your last day of work or at age 55. Please refer to the following chart for the specific eligibility requirements for the various types of retirement.

* Members who left CMERS service after satisfying the minimum service credit requirement but have postponed collection of the benefit until they reach the age of 55.

Benefit Calculation

CMERS Benefit Estimator:

• Please refer to the following benefit estimator if you would like to obtain an estimate of your potential CMERS pension payment under different scenarios:
  CMERS Part A Benefit Estimator
  

CMERS  Benefit Formula and Factors:

• The amount of your monthly benefit is ?defined? by a formula which takes into account your years of retirement service credit, your average salary, your age, and your plan membership.
   
• Your basic normal retirement benefit is calculated using one or two formulas, depending on whether or not you are covered by Social Security, and if you are covered by Social Security depending on your age and whether or not you are receiving a Social Security Disability Award.
   
• If your employment is not covered by Social Security or if your employment is covered by Social Security and you retire before age 62 and you are not receiving a Social Security Disability Award when you retire, your basic annual benefit equals:

2 % X Final Average Pay X Years/Months of Service

• Important: CMERS Part B members will be subject to a reduction upon reaching the age of 62 or upon receipt of a Social Security Disability Award prior to the age of 62. CMERS Part B members must notify CMERS if they receive a social security disability award prior to the age of 62.
  

Age 62 - Social Security Reduction

• All CMERS Part B members who are covered by Social Security are subject to the Age 62 - Social Security Disability Award reduction.
   
• There are 2 triggers for this reduction:
  • When you reach the Age of 62 (when you are eligible for social security), or
  • Prior to the age of 62 if you receive a Social Security Disability Award.
     
• It is your obligation to notify CMERS if you collect a disability Social Security benefit prior to reaching the age of 62.
   
• At this time your CMERS benefit will be recalculated using the following formula:

1 ?% X Final Average Pay X Years of Service
Up to the Year?s Breakpoint

Plus

2 % X Final Average Pay X Years of Service
Above the Year?s Breakpoint

• The applicable breakpoint can be found on this chart:
  http://osc.ct.gov/index.phprbsd/cmers/plandoc/breakpoint.htm
  
  

Benefit Rate:

• Benefit Rate: Your years of service and your age will determine your Benefit Rate.
   
  • If you are under the age of 55, your benefit rate will be determined by the combination of your age and years of service based on the following chart: http://osc.ct.gov/index.phprbsd/cmers/plandoc/ERetFact.pdf 
     

Retirement Service Credit:

• Retirement Service Credit Includes:
  • All periods of service for which you have paid retirement contributions.
     
  • Periods of creditable workers? compensation.
     
  • Any periods of purchased service credit will be included in your total retirement service credit.
    • Please refer to the CMERS summary plan description for further information regarding possible retirement service credit purchase opportunities: http://osc.ct.gov/index.phprbsd/cmers/plandoc/MERFSPD7107.pdf
       
• Retirement Service Credit Excludes:
  • Any periods for which you have not paid retirement contributions, this may include:
  • Un-purchased leaves of absence without pay;
    

Part-Time Service:
If you have had part-time service, you should know that:

• For retirement eligibility purposes, your part-time service will be treated as if it were full-time service.
   
• For retirement income calculation purposes, however, your benefit will be adjusted to reflect the portion of the standard full-time schedule you worked throughout your employment.

Remember, you must customarily work at least 20 hours per week in order to qualify for CMERS membership.

Average Salary

• Your average salary is the average of your 3 highest paid years of service.
   
• Any 1 period of 12 consecutive months equals 1 year.
   
• Although for the majority of retirees the average salary is the average of the last 36 months of employment, when calculating your average salary the 3 years do not have to be consecutive years or calendar years.
  

Cost of Living Adjustment

• Your pension is subject to an annual Cost of Living Adjustment (COLA).
   
• These cumulative raises will be paid each year on July 1st depending on your date of retirement (DOR).
   
• Your contingent annuitant will also continue to receive annual COLAs following your death.
   
• The COLA for non-disability retirements will range from a minimum 2.5% to a maximum of 6% based on a formula which takes into account a portion of the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the 12 months immediately preceding your COLA anniversary date.
   
• The COLA for disability retirements will range from a minimum of 3% to a maximum of 5% based upon the performance of the fund?s investments.

Social Security and the CMERS Benefit

Part B Social Security Information

• If a CMERS member receives a pension from a government job in which s/he did not pay Social Security taxes, some or all of the member's Social Security spouse's, widow's or widower's benefit may be offset due to receipt of that pension. This offset is referred to as the Government Pension Offset or GPO.
   
• Social Security regulations contain a Windfall Elimination provision (WEP). WEP primarily affects a CMERS member if he or she earned a pension in any job where s/he did not pay Social Security taxes and also worked in other jobs long enough to qualify for a retirement or disability benefit.
   
• The WEP most likely applies to all ?Part A? CMERS members who were not entitled to a CMERS pension prior to January 1, 1986. However, WEP most likely does not apply if a ?Part A? employee was entitled to a CMERS pension prior to January 1, 1986.
   
• A CMERS Part A member hired prior to January 1, 1976, having at least ten (10) years of active service prior to 1986 and has not yet applied for Social Security should call CMERS at 860-702-3500 and ask for a Letter of Eligibility to Retire. The member should submit this letter with any other documents required by Social Security. The Social Security Administration - not CMERS - makes the final decision with regard to exemption.
   
• WEP does not apply to Part B employee (those employees who have social security contributions taken from their paychecks) and these employees do not need a Letter of Eligibility to Retire from CMERS
   
• CMERS cannot answer questions on how Social Security may affect a pension: questions on these issues must be referred to Social Security. Web Site: http://www.ssa.gov  Toll-Free Number: 1-800-772-1213.

Part B Social Security Information

• Members who are covered by Social Security (?Part B?) have their benefit reduced when they reach the Age of 62 or earlier if they receive a social security disability award prior to the age of 62.
   
• A CMERS Part B member is required to notify CMERS if they receive a social security disability award prior to the age of 62 or if any part of a retroactive social security award covers any time period prior to the age of 62. For example, if you are 63 years old, started to collect a CMERS benefit at the age of 60 and receive a retroactive social security disability award back to the age of 61, you still must report this award to CMERS since it will affect the CMERS benefit you received from age 61-62.

Survivor Benefits

Overview

• The survivor option dictates what benefits, if any, are payable after your death.
   
• When you retire you must select one of 4 different income payment options (Survivor Options).

• This choice is irrevocable. You will not be able to switch to another option for any reason including but not limited to death or divorce once your pension goes into pay status.
   
• Regardless of the option you choose, you will receive a monthly pension for the rest of your life.
   
• The cost of selecting a survivor option varies according to the option you choose; your age; and, in some cases, the age of the person you are protecting. For an estimate of the cost under any of the different survivor options please refer to the appropriate benefit estimator:

CMERS Part A Benefit Estimator
CMERS Part B Benefit Estimator

Certification of Marital Status PDF format

• Unmarried (single) members of CMERS may choose any payment election option they wish to choose. Single members must execute this form attesting to the fact that they are not married or subject to a spouse's consent.
   
• If you have been married less than one year (twelve months) as of the date of retirement you are not required to provide a lifetime benefit (Option A or B) to your spouse. If you have been married under one year you need to execute this form if you do not provide an option that provides a lifetime benefit for your spouse.

Spousal Waiver PDF format

• A member who has been married at least one year at the time of retirement must provide a lifetime benefit (Option A or B) to his/her spouse unless the spouse signs a waiver consenting to a different payment election.
   
• If you, at the time of retirement, have been married for at least one year and do not choose payment Option A or Option B naming your current spouse as the annuitant, you and your spouse are required to execute this form.
   
• You need to fill out Part II Member's Statement and your spouse needs to execute Part III Spouse Waiver in front of a Notary.

Option D - Straight Life Annuity PDF format

• This option pays you the maximum monthly benefit for your lifetime only.
  • All benefits will end upon your death.
  • This is the ?default? option for single members.

Option A - 50% Spouse PDF format

• This benefit guarantees a monthly benefit for you and your spouse.
   
• This option will pay you a reduced benefit for your lifetime in exchange for the protection that, should you pre-decease your spouse, CMERS will continue to pay 50% of your reduced benefit for your spouse?s lifetime.
   
• Your benefit will be reduced by a factor that accounts for both your age and your spouse?s age.
   
• This option is available to retirees who are married at the time of retirement.
   
• This option is the "default option" for married members.
   
• Under no circumstances can you change options or replace your spouse with another annuitant.
   
• If you are married, it is statutorily required that you provide your spouse with a lifetime monthly benefit unless your spouse executes a waiver giving up this benefit.

Option B - 50% or 100% Contingent Annuitant PDF format

• This option provides you a reduced monthly benefit for your life and allows you to guarantee lifetime payments after your death to any one person. After your death, a percentage of your reduced benefit, either 50% or 100%, whichever you choose, will continue for your contingent annuitant?s life.
  • Your benefit will be reduced by a factor that takes into account the level of protection you are guaranteeing (50% or 100%) along with your age and the age of your contingent annuitant.
     
• Your contingent annuitant can be any one person. This person does not need to be a spouse or a family member, although you are free to name a spouse under this option.
   
• Under no circumstances can you change options or substitute your contingent annuitant.
  
  

Option C - 10 Year or 20 Year Period Certain PDF format

• This option provides you a reduced monthly benefit for your lifetime in exchange for the guarantee that monthly benefits will be paid for at least 10 or 20 years from your retirement date (whichever you choose).
   
• If you should die within 10 years (120 payments) or 20 years (240 payments) from your date of retirement, the remaining payments, in accordance with your selection, will be made to your contingent annuitant(s).
  • This is the only option that allows you to name more than one contingent annuitant, each of whom would receive any remaining monthly payments in equal shares.
     
• Your benefit will be reduced by a factor that takes into account the period of time for which you are providing protection and your age. Under this option, the age of your contingent annuitant(s) does not impact the amount of your monthly benefit.
   
• Your named contingent annuitant(s) will only receive benefits under this option if you die within the protected period.
  • This option provides no guarantee of benefits to anyone other than the retiree beyond the protection period.
     
  • Although your pension will continue for your lifetime, if you die after the State has paid all of the guaranteed payments, all benefits will end upon your death.
     
• If your contingent annuitant dies before you, and the protection period has not expired, you may name a new contingent annuitant.
   
• Under no circumstances can you change your option.

Insurance: Health, Dental, and Life

• IMPORTANT: There are no health, dental, life or any other insurance benefits available to CMERS retirees under the CMERS retirement system.
  
  
• Employees need to contact the human resource manager, benefit officer or personnel director in their town or agency to determine what, and if any, post retirement health, dental, life or other insurance benefits are available to them. CMERS DOES NOT HAVE THIS INFORMATION.

The Retirement Process

Notification to Employer

• Your Employer is responsible for completing your retirement paperwork and submitting these forms to CMERS.
   
• Generally, we suggest that you notify your employer in writing 90 days prior to your anticipated date of retirement.
   
• Your effective retirement date can be any day of the month following your last day of employment.
   
• Your completed retirement application and all necessary forms must be received by CMERS at least 30 days prior to your Date of Retirement.

Required Forms

• Forms Your Employer Will Provide:
  • Your employer will provide most of the required retirement forms. These forms include: your retirement application, an income payment election form and a spouse waiver form. CMERS will provide you with state and federal tax forms and a direct deposit form with the award letter to you.
     
• The following forms are available on-line:

• Forms You Will Need to Provide:
  • You will need to provide a copy of your birth certificate.
    • If you choose a survivor option which provides a lifetime benefit to a contingent annuitant, you will need to provide a copy of your contingent annuitant?s birth certificate.
       
    • If you are married, you will need to provide a copy of your marriage certificate or license.
      

Audit Process

• There are two parts to the audit process: (1) the estimate and (2) finalization.
   
• If CMERS received your complete retirement application package with all necessary forms, documents and payroll information at least thirty days prior to your effective date of retirement, you will receive your first retirement check at the end of the month in which you retire and at the end of each month thereafter.
   
• CMERS unit auditors will perform a preliminary audit of your entire retirement record and establish your benefit entitlement.
   
• You will then be placed on the retiree payroll at an estimated amount.
   
• The audit process to determine your exact retirement benefit takes considerable time; therefore, you will be paid at an estimated level until the audit is completed ? generally six months.
   
• When your exact retirement benefit has been computed and verified, your income will be adjusted for any difference between the estimated amount you were paid and your finalized benefit retroactive to your retirement date.

Pension Checks

• Retirement checks are paid monthly at the end of the month.
   
• Your pension is taxable income although exceptions may exist for service connected disabilities. All retirees are subject to federal taxes. Whether you pay state tax may depend on the state you live in as a retiree. For more information regarding any obligation to pay Connecticut state taxes please contact the Department of Revenue services. http://www.ct.gov/drs/site/default.asp 
   
• Many deductions you pay as an active employee will end in retirement:
  • You will no longer pay Social Security or Medicare taxes;
  • Your retirement contributions will end; and
  • Union dues are no longer mandatory in retirement.

Employer Payouts

• For purposes of a CMERS retirement benefit, ?pay? does not include any lump sum reimbursements for accrued or unused sick or vacation time, settlement awards, severance pay or monies. Therefore if you receive any of lump sum payment at the time of your retirement, it will not be included in the calculation of your retirement benefit.

Re-Employment

• Once you retire from government service, provided you do not leave under a CMERS disability retirement, CMERS has no limitations on your outside employment. So long as you do not return to CMERS employment, you can work as much as you want and earn as much as you want without impairing your CMERS pension.
   
• If you leave under a disability retirement please check with CMERS prior to accepting any employment.
  


• You may be employed in a CMERS position with no restrictions by rescinding your retirement.
  


• Under certain circumstances, you may return to active CMERS employment while retaining your full CMERS pension. If you are employed in a CMERS position in the future, you may continue to receive a CMERS pension as the position is temporary and you work no more than the equivalent of 90 working days per calendar year.
  


• If you become permanently employed in a CMERS position, your retirement benefits must cease. However, after such re-employment you will build credit towards a future retirement above and beyond what you had accrued prior to your initial retirement.

Service Connected Disability and Workers Compensation

• If you are a CMERS retiree is receiving a CMERS service-connected disability retirement then all workers compensation payments are taken as offsets against the retirement benefit except for specific indemnity payments.
   
• If you receive any workers compensation payments at the same time you are receiving or were deemed eligible to receive a service connected disability benefit you should immediately notify CMERS.
   
• Receipt of workers compensation benefits without a corresponding offset (reduction) to a CMERS service connected disability retirement allowance will result in an overpayment of the retirement allowance. If an overpayment has been made, CMERS will seek repayment through a reduction in the retirement benefit.

Sources of Information

• MERS offers counseling to members on a limited basis. MERS can answer most general retirement questions by phone. If you have additional retirement questions or would like to arrange for individualized counseling, contact CMERS at (860) 702-3500.

Other Resources:

• CMERS Summary Plan Description  
  • Summary Plan Description Booklets provide more detailed plan information and are available online
    http://osc.ct.gov/index.phpempret/tier1summ 
     
• CMERS Website
  Frequently Asked Questions - Active Members
  Frequently Asked Questions - Retirees
  Important Social Security Information
  Overpayment and Repayment
   
• CMERS Benefit Estimator
  CMERS Part A Benefit Estimator
  CMERS Part B Benefit Estimator
  
  
• Social Security Administration
  • The Social Security Administration provides Personal Earnings and Benefit Estimate Statements annually and also upon request. You may request a statement by (1-800-772-1213) or online www.ssa.gov.  You should also contact them with any questions on the Windfall Elimination Provision (WEP) or the Government Pension Offset (GPO).
     
• Internal Revenue Service Retirement Information
  • http://www.irs.gov/retirement/index.html?navmenu=menu1
     
• Connecticut Department of Revenue Service
  • For information regarding your obligation to pay state taxes on your CMERS pension please contact the Connecticut Department of Revenue Services by phone (860) 297-5962 or online http://www.ct.gov/drs/site/default.asp

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