Retirement Benefits under FRS Pension Plan | Helpful Guide for FRS Members

Understanding Your Retirement Benefits Under the FRS Pension Plan For FRS Members Enrolled Prior to July 1, 2011 Chad Poppell, Secretary

PENSION PLAN MEMBER HANDBOOK DIVISION OF RETIREMENT 2

RETIREMENT GUIDES DIVISION OF RETIREMENT 3

FRS.MYFLORIDA.COM 4

DISCLAIMER If questions of interpretation arise as a result of the attempt to make retirement provisions easy to understand, Chapter 121, Florida Statutes; Chapter 60S, Florida Administrative Code; and the Internal Revenue Code shall remain the final authorities. DIVISION OF RETIREMENT 5

FRS HISTORY FRS Created in December 1970 (TRS/SCOERS Merger) Only one plan FRS Pension Plan Employee Non-Contributory System (Jan. 1, 1975 June 30, 2011) 3% Employee Contributions effective) July 1, 2011 FRS Investment Plan offered beginning July 1, 2002 DIVISION OF RETIREMENT 6

TWO FRS PLANS This comparison has been designed to be intentionally brief and is not intended to include every plan detail. Complete details can be found in Chapter 121, Florida Statutes, and the rules of the State Board of Administration of Florida (SBA) in Title 19, Florida Administrative Code (F.A.C.) and the rules of the Division of Retirement of the Department of Management Services; Chapter 60-S , F.A.C. DIVISION OF RETIREMENT 7

TWO FRS PLANS Pension Plan Investment Plan Dept. of Management Services State Board of Administration Division of Retirement Aon Hewitt Plan Choice Guidance or for financial planning and counseling call the My FRS Guidance Line at (866) 446-9377 Ernst & Young (EY) MyFRS.COM DIVISION OF RETIREMENT 8

ELIGIBILITY FOR A FUTURE BENEFIT UNDER THE FRS PENSION PLAN Occurs when you become a vested member. Vested membermeans you have met the years of service required to be eligible to receive a future benefit under the plan. DIVISION OF RETIREMENT

VESTING Members enrolled prior to July 1, 2001: Seven, Eight or 10 year vesting Members enrolled on July 1, 2001 though June 30, 2011: Six year vesting Members enrolled on or after July 1, 2011: Eight year vesting 10

NORMAL RETIREMENT DATE Is when you are first eligible to receive an unreduced retirement benefit; and Is also when your are eligible to participate in the Deferred Retirement Option Program (DROP). DIVISION OF RETIREMENT

NORMAL RETIREMENT DATE Special Risk Class Service Vested and age 55 or 25 years of Special Risk Class Service whichever occurs first; or Combined total of 25 years of Special Risk Class service and military service purchased under the Active Duty Wartime Military Service provision and age 52. All other Service Classes Vested and age 62 or 30 years of service whichever occurs first. 12

NORMAL RETIREMENT DATE If reaching your Normal Retirement date by: Age, your Normal Retirement date would be the first of the month you turn that age. Years of service, your Normal Retirement date would be the first of the month following the month you attain the years of service. DIVISION OF RETIREMENT

NORMAL RETIREMENT DATE - DROP K-12 Instructional Personnel, may enter DROP at Normal Retirement or at anytime after reaching Normal Retirement and participate for a full 60 months. All others, unless you are eligible to defer your 60- month DROP participation period, your 60-month DROP participation period starts at your Normal Retirement date. 12 month election window DIVISION OF RETIREMENT

WHO CAN DEFER THEIR 60-MONTH DROP PARTICIPATION PERIOD? All membership classes except for Special Risk Class: If you reach your Normal Retirement date by years of service prior to reaching age 57, you may defer your entry into DROP up until the month in which your reach age 57 and still be eligible to participate in DROP for 60 months. 12 month election window. Elected Officials may defer DROP entry until the next term of office but can only participate for 60 months or the length of that term of office whichever is less. DIVISION OF RETIREMENT

WHO CAN DEFER THEIR 60-MONTH DROP PARTICIPATION PERIOD? Special Risk Class Members: If you reach your Normal Retirement date by years of service prior to reaching age 52, you may defer your entry into DROP up until the month in which your reach age 52 and still be eligible to participate in DROP for 60 months. 12 month election window. DIVISION OF RETIREMENT

WHAT IS DROP? You effectively retire under the Florida Retirement System (FRS) Pension Plan delaying termination for up to 60 months. Your monthly retirement benefits accrue in your DROP account while participating in DROP. Your DROP account earns an effective annual interest rate of 1.3 percent. Your Retirement benefit while in DROP receives an annual Cost-of-Living Adjustment (COLA). As a DROP participant you are not subject to 3 percent employee contributions. DIVISION OF RETIREMENT

UPON TERMINATION OF DROP DROP accumulation is paid in one of three ways: as a lump-sum payment, with 20 percent withheld for federal income taxes; as a direct rollover to an eligible retirement plan; or as a combined partial lump-sum payment and direct rollover. A DROP termination packet mailed three months prior to your DROP ending date (Forms DP-Term & DP-PAYT). DIVISION OF RETIREMENT 18

THE BENEFIT CALCULATION FORMULA Years of Service % Value per Year Average Final Compensation X X = Option 1 Gross Annual Benefit at Normal Retirement Divide by 12 = Gross Monthly Option 1 Benefit DIVISION OF RETIREMENT

YEARS OF SERVICE Is the total of all years and parts of years you worked in a covered position with an FRS employer plus any optional service credit that you purchase. DIVISION OF RETIREMENT

OPTIONAL SERVICE CREDIT Refunded Service Must earn a year of creditable service after taking the refund to be eligible to purchase. Leave of Absence Up to 2 years. Wartime Military Service Up to 4 years. Must have been employed in an FRS covered position prior to 1/1/1987. Must be active duty service during certain wartime military dates. Service cannot have been used under any other Pension Plan. DD-214. Must have been authorized in writing by employer before or during the leave. Must have returned to work for one complete calendar month immediately after leave of absence. Form FR-28. DIVISION OF RETIREMENT

OPTIONAL SERVICE CREDIT In-State and/or Out of State Service May claim up to a combined total of 5 years of In-state and Out of State service purchasable only as Regular Class service. Service claimed must have been performed as a public employee participating in a pension plan in another state, a political subdivision of another state; or As a public employee in Florida, including periods of employment in charter schools or in any nonpublic school or college in Florida that is accredited by the Southern Association of Colleges and Schools; or Service with the federal government or military may qualify as out-of- state service. Form FR-30 or DD-214 DIVISION OF RETIREMENT

ACCRUAL VALUE PER YEAR OF SERVICE . Regular Class Service Age 62 or 30 years = 1.60% Age 63 or 31 years = 1.63% Age 64 or 32 years = 1.65% Age 65 or 33 years = 1.68% Senior Management Service Class = 2.00% Special Risk Class Service Service earned on or after July 1, 1974 = 3.00% Service earned prior to July 1, 1974 = 2.00% Elected Officers Class Service Judges and Justices = 3.33% All others = 3.00% DIVISION OF RETIREMENT

AVERAGE FINAL COMPENSATION (AFC) Average of your highest five fiscal years of salary.* Statute allows up to 500 hours of annual leave to be used in the calculation of the AFC. State agency employment limits as follows: Career Service employees - Up to 240 hours of lump sum annual leave can be used in the calculation of your AFC. Senior Management and Select Exempt employees - Up to hours 480 of lump sum annual leave can be used in the calculation of your AFC. Consult your Human Resource office. * Fiscal Year is July 1 through June 30. DIVISION OF RETIREMENT

BENEFIT FORMULA CALCULATION Member with all Regular Class Service at Normal Retirement: Average Final Compensation Years of Service X % Value/Year X 30 X 1.60% X $25,000.00 = Gross Annual Option 1 Benefit of $12,000.00 Divide by 12 = Gross Monthly Option 1 Benefit of $1,000.00 25

BENEFIT FORMULA CALCULATION Member with all Special Risk Class Service at Normal Retirement: Average Final Compensation Years of Service X % Value/Year X 25 X 3.00% X $25,000.00 = Gross Annual Option 1 Benefit of $18,750.00 Divide by 12 = Gross Monthly Option 1 Benefit of $1,562.50 DIVISION OF RETIREMENT

BENEFIT FORMULA CALCULATION Member with Regular and Special Risk Class Service at Normal Retirement both classes of service: Years of Service X % Value per year X AFC Option 1 Annual Benefit 25 years Special Risk X 3.00% X $25,000.00 $18,750.00 5 years Regular Class X 1.60% X $25,000.00 $2,000.00 Total Option 1 Annual Benefit Amount $20,750.00 Divide by 12 to get Monthly Option 1 Benefit $1,729.17 DIVISION OF RETIREMENT 27

EARLY RETIREMENT Service Retirement before Normal Retirement Date Benefit Reduced 5% for each year under Normal Retirement age or proportional share thereof. Special Risk Class Reduced from age 55. All other Classes Reduced from age 62. DIVISION OF RETIREMENT

BENEFIT PAYMENT OPTIONS Option 1: Lifetime monthly benefit to you. Option 2: A reduced monthly benefit payment to you for your lifetime. If you die 10 years or more after retirement, no benefits are payable to your beneficiary. However, if you die within 10 years (120 months) of your effective retirement date, your beneficiary will receive a monthly benefit payment in the same amount you were receiving for the balance of the 120-month period (including any period of DROP participation). No further benefits are then payable. Option 3: A reduced monthly benefit payment to you for your lifetime and a continuing benefit to your beneficiary. No further benefits are payable after both you and your beneficiary die. Option 4: An adjusted monthly benefit to you while you and your beneficiary are living. Upon the death of either you or your beneficiary, the monthly benefit is reduced to 2/3 of the benefit payable while both were living. DIVISION OF RETIREMENT

BENEFICIARY DESIGNATION Option 1 or 2 Beneficiary can be anyone. Option 3 or 4 Beneficiary must be a qualified Joint Annuitant. DIVISION OF RETIREMENT

Joint Annuitant Your spouse. Your parent, grandparent, or a person for whom you are the legal guardian, claimed as a dependent on your federal income tax. Your natural or legally adopted child who is either under age 25 or is physically or mentally disabled and incapable of self-support (regardless of age). DIVISION OF RETIREMENT

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Fiscal Year: 2019 Fiscal Year: 2019 Benefit Benefit Fiscal Year: 2020 Fiscal Year: 2020 Benefit Benefit 33

COST OF LIVING ADJUSTMENT (COLA) Retirees (including DROP participants) receive a COLA in their July benefit each year. All service earned through June 2011 receives a 3% COLA Service earned July 2011 and after 0% COLA Formula: Years of service through June 2011 divided by Years of service at retirement X 3%. 26/30 X 3% = 2.60% 28.50/30 X 3% = 2.85% DIVISION OF RETIREMENT

APPLYING FOR SERVICE RETIREMENT Applications are accepted up to 6 months prior to your effective retirement date. To retain your first eligible effective retirement date, you application must be received by the division within 30 days of your termination date. If your application is not received by the division within 30 days of your termination date, your effective retirement date will be the first of the month following the month we receive your application. Form FR-11 Application for Service Retirement DIVISION OF RETIREMENT

APPLYING FOR DROP RETIREMENT Applications are accepted up to 6 months prior to retirement date. Form DP-11 Application for Service Retirement and DROP Notice of Election to Participate in the DROP and Resignation of Employment Form DP-ELE Form DP-11 and/or DP-ELE, must be received by the division no later than the last state working day of the month you elect to participate in DROP. DIVISION OF RETIREMENT

OTHER ITEMS REQUIRED TO COMPLETE APPLICATION FRS-11o - Option Selection Form SA-1 - Spousal Acknowledgement Form Birth Date Verification member and Joint annuitant (See BVR-1 Form) Copy of Marriage Certificate - if you selected benefit payment option 3 or 4 and listed your spouse as your joint annuitant 37

FORMS ON WEBSITE: FRS.MYFLORIDA.COM DIVISION OF RETIREMENT

THE RETIREE PACKET A retiree packet is mailed just prior to receipt of your first benefit payment and includes the following: Form W-4P, Withholding Certificate for Pension Payments (or complete online) Form DFS-A1-26R, Direct Deposit Authorization (or complete online) Form HIS-1, Health Insurance Certification for Pension Plan Members DIVISION OF RETIREMENT

REEMPLOYMENT AFTER RETIREMENT During the first six calendar months of retirement or following your DROP termination date, you may not work for any FRS employer. If you do, you will void your retirement and you will have to pay back any benefits received including your DROP payout During the 7th 12th calendar months of retirement or following your DROP termination date, if your return to work for an FRS employer you must suspend your retirement benefit for the months you worked. DIVISION OF RETIREMENT

REEMPLOYMENT AFTER RETIREMENT Renewed Membership Closed effective 07/01/2010. Any retiree initially reemployed with an FRS participating employer on or after July 1, 2010, will not be eligible to participate in any state- administered retirement system. DIVISION OF RETIREMENT

IMPORTANT NOTICE Forfeiture of Benefits as defined by Florida Statutes 121.091(5) or 112.3173 If you commit a specified offense prior to retirement or while participating in DROP and you were either: Convicted by a court of competent jurisdiction; or Terminated from employment as a result of admitting to the commission of a specified offense You will forfeit ALL of your retirement rights and benefits! DIVISION OF RETIREMENT

FRS.MYFLORIDA.COM DIVISION OF RETIREMENT

FRS ONLINE LOG IN PAGE DIVISION OF RETIREMENT

FRS ONLINE ACTIVE MEMBER My Account modules Member Services modules Other Links DIVISION OF RETIREMENT

FRS ONLINE DROP PARTICIPANTS DROP Services Modules DROP Information Provides your DROP Account details and your DROP accrual monthly for your DROP participation period. Beneficiary View your beneficiary designation; change your beneficiary designation if you selected Option 1 or 2. To change your beneficiary under Option 3 or 4, contact the Division. 46

FRS ONLINE - RETIREE SERVICES Account Information View your current or prior monthly benefit payment stubs/statements and 1099R Tax Form. View/change your Federal Tax withholding. Print a Pension Income Verification Letter. Beneficiary View your beneficiary. Change your beneficiary if you selection Option 1 or 2 Contact information to the division to change your beneficiary under Option 3 or 4 (limited to two changes). Address Change To update your address. Direct Deposit Update your direct deposit information 47

CONTACTING THE DIVISION Telephone: Toll free 844-377-1888 Locally 850-907-6500 Email: retirement@dms.myflorida.com DIVISION OF RETIREMENT

QUESTIONS AND ANSWERS DIVISION OF RETIREMENT 49