Reimbursement of retirement scheme available to a beneficiary of a dead member of the scheme, are death benefits

Reimbursement of retirement scheme available to a beneficiary of a dead member of the scheme, are death benefits

Introduction

The Vermont State has offered the Vermont State retirement Scheme (VSRS), a government pension scheme to their State employees.  The scheme originated in 1994.  Within years, it underwent key transformations including merging of the retirement schemes for the Motor Vehicle Inspectors and State police.  In 1990, the government permitted a come back to the contributory scheme effective January 1, 1991 and its full implementation saw an execution on January 1, 1995.

State Government Employees who come under the scheme

All State Government employees consisting of legislators, teachers and employees of the legislature, police, fire and correctional officers come under this plan.

Description of Plan

The Pension schemes include:

Vermont State teachers Retirement Scheme (VSERS)

Vermont State Employees’ Retirement Scheme (VSERS)

Vermont Municipal Employees’ Retirement Scheme (VMERS)

Types of benefits existing

Your Average Final Compensation (AFC) is one way of calculating your pension benefits.  Group “A” members need a minimum of five highest consecutive years of service for consideration for full retirement.

  • Three highest consecutive years of service – for  Group B and C
  • Two highest consecutive years of service – for Group D
  • Besides, your age, they also consider years of creditable service at retirement.

Features of the VSERS

This is a pension plan for the State employees. It is a defined benefit contributory plan to which the employees make a regular contribution. The annual pre-tax contributions of the employees, which are 6.40% of their total pay, go into the trust fund along with the contributions that are made by the Vermont State.  The employee’s actual pension benefit is based on a calculation that involves the employee’s earned service credit, the average final pay and the age of the employee at the time of retirement.

 Contributions Required In Municipal Retiree Plan

  • Group A- 2.5 % of pay goes into the trust fund as pre-tax and Contribution through employer’s is 4%.
  • Group B- 4.5% of pay goes into the trust fund as pre-tax and contribution though employer’s part is 5%.
  • Group C- 9.25% of pay goes into the trust fund as pre-tax and contribution though employer’s part is 6.5%
  • Group D- 11% of pay goes into the trust fund as pre-tax and contribution and the employer pays 9.5%.

Types of Survivor Benefits Available and At What Costs

Reimbursement of retirement scheme available to a beneficiary of a dead member of the scheme, are death benefits.  At the time of dying, if a Group A, B or C member has  put in 5 years of creditable service, the nominated recipient can opt for a monthly benefit for the remaining life, as if the member died on the retirement date and opted for “option 1”  that is the 100% Survivorship plan.

Normal Retirement Age Options for Municipal Employees in Vermont

  • Group A – 5 years of creditable service at age 65, or completion of 35 years of service at age 55
  • Group B – 5 years of creditable service at age 62 or completion of 30 years of creditable service at age 55
  • Group C – Completion of 5 years of creditable service at age 55
  • Group D – Completion of 5 years of creditable service at age 55

Early Retirement (Reduced benefit)

  • Group A – Completion of 5 years of creditable service at age 55
  • Group B – Completion of 5 years of creditable service at age 55
  • Group C – NA
  • Group D – Completion of 20 years of creditable service at age 50
 This announcement considered making laws stopping retirement payments to government employees who stood convicted of certain criminal records

This announcement considered making laws stopping retirement payments to government employees who stood convicted of certain criminal records

Disability Retirement

There are two types of disability retirement options.

  • Ordinary Disability – The Board of Trustees has to establish that the employee is disabled on medical grounds and the time of disability, the employee should have put in five years of service.
  • Service Related Disability – If there is a disability that has been suffered by the employee while being in service, then there is no minimum service criterion.

After an employee becomes disabled, the application for retirement has to be filed within ninety days of the date of disability. The application is scrutinized by the Medical Review Board and then approved by the Board of Trustees proving that the employee is disabled on medical grounds.

Applying for Pension Benefits

An employee has to apply for pension benefits as they are not assigned automatically. The employee has to contact the Retirement Office and that too, nine months before the retirement date. The employee will get an estimate along with health insurance and tax forms. Employee has to complete sixty two years of age or thirty years of credited service when retiring.

The pension benefits are paid out every month on the last day, beginning with the month end in which the retirement of the employee takes place. The retirement date is generally the first day that follows the last day spent at work. Electronic banking has now become compulsory for all employees retiring after 1st January 1999.

Calculation of the Retirement Benefits

  • Normal Retirement – The employee’s average final compensation, highest three- year pay or the average of the last three years, whichever is more, will be considered. The third factor is the number of credited service years at the time of retirement. For normal retirement that takes place at age 62 or after thirty years of completed service, benefits are not reduced.
  • Early Retirement – If the employee is less than 62 years in age and has not put in thirty years of service, but is over 55 years with five years of credited service, there is a possibility of applying for early retirement.

Retirement payout Options

  • Maximum Benefit – The basic and maximum pension benefit is paid to the employee for life with no refund for contributions at death. If the employee does not opt otherwise, Maximum benefit payment will only be considered. The employee has to select a reduced benefit option if the spouse or other beneficiaries have to receive any pension benefits.
  • 100% Survivorship – This option allows the beneficiaries to get the same monthly pension allowance for life that the employee would have received. The reduction for this option from the basic pension benefit will be somewhere between ten and twenty five per cent based on the difference in age between the employee and the designated beneficiary.

Plan Funding Level

The contributory schemes and policies of the State Treasury office administrators, implemented by the Vermont Pension Investment Committee are for the advantage of the Vermont State Teachers Retirement scheme, Vermont State retirement Scheme and Vermont Municipal Employees Retirement Scheme.

It is crucial to allocate assets in the plan.  They distribute the assets from the three pension schemes to protect the portfolio from temporary market fluctuations and let each portfolio sustain firmness in maintaining the assets of different classes.

Vesting Period or How Many Years Before One Could Get a Pension

If you opt for voluntary retirement at 55, having 5 more years of service and continue your contributions, you are eligible for a vested retirement benefit, which is payable to you at the usual retirement age of your group, and is similar to the usual retirement benefit.

Cost of Living (COLA) or Other Inflation Protection

COLA entitles both the normal retirees and retirees of the previous retirement scheme for their first cost-of-living adjustment on the first day of January after receiving twelve pension checks receipts.

They decide the COLA on a percentage of the Consumer Price Index (CPI) change on the preceding June30 and is automatically attached to the January payment  on that is payable on January 31.  The highest COLA for group “A” members is 2% every year and 3% for group B, C and D.

Basic URL for state pension site

http://www.vermonttreasurer.gov

Some recent news bits

On 19 February 2013, there was a press release by Vermont State Employees’ Retirement System about State treasurer Beth Pearce’s announcement.  This announcement considered making laws stopping retirement payments to government employees who stood convicted of certain criminal records.  This proposal has the approval of the three boards.

Recently, a State Trooper by the name of Bruce Land was in news in Vermont. He started employment in 1977 and the biggest motivation for him to take up the job was the benefits package that the state of Vermont was offering to the State Troopers. He was only eighteen at that time. He retired as a Major after putting in thirty years of service in 2007. He has been reported to have got the highest State police pension individually at $84,522 on an annual basis. The Burlington Free Press has covered this story to bring out the fact of how the State of Vermont looks after its retirees.

(Source:  http://www.burlingtonfreepress.com/article/20110403/NEWS)