|55 ELM STREET
TELEPHONE: (860) 702-3480
|MEDICAL EXAMINING BOARD
for DISABILITY RETIREMENT
|HEALTH CARE COST
|STATE OF CONNECTICUT
RETIREMENT AND BENEFIT SERVICES DIVISION
OFFICE OF THE STATE COMPTROLLER
RETIREMENT & BENEFIT SERVICES DIVISION MEMORANDUM
October 17, 2003
TO ALL MUNICIPALITIES PARTICIPATING IN THE
MUNICIPAL EMPLOYEES RETIREMENT SYSTEM
|ATTENTION:||Personnel and Payroll Officers|
|SUBJECT:||Public Act No. 03-138|
The purpose of this memorandum is to describe in summary fashion the provisions of Section 2 of Public Act No. 03-138, which provides a new purchase opportunity to certain members of the Municipal Employees Retirement System (MERS) with prior membership in a non-MERS municipal system.
Section II of this memorandum addresses the eligibility requirements associated with this purchase opportunity. Section III provides instructions for the use of the purchase request form. Section IV describes the purchase cost factors and payment procedures.
II. Eligibility Requirements
Section 2 of Public Act 03-138 amends Connecticut General Statutes, Section 7-442b and thereby changes the way in which a MERS member may obtain credit for their prior non-MERS membership period. This statutory revision was effective June 26, 2003 and therefore applies to employees who are members of the MERS on and after that date.
Prior to this amendment, in order for a MERS member to obtain such credit in the MERS, the former non-participating municipality had to voluntarily transfer the entire amount paid into such municipal fund by the employer and the employee. With this amendment, a MERS member has the ability to purchase all or part of their prior non-MERS membership period if their former municipal employer declines to make the aforementioned voluntary transfer.
If a MERS member has received a refund of their employee contributions from their former municipality, such member is ineligible for this purchase; the employer and employee contributions must reside in the former municipal fund. Also, no credit can be obtained for any period of service for which any governmental unit is or will be paying a retirement benefit or if such credit would result in multiple service credit for the same period of service.
III. Purchase Request Form
To initiate a purchase of non-MERS retirement credit, a MERS member must make application on the attached form entitled, "Retirement Credit Purchase Request Pursuant to Public Act No. 03-138".
The current employer should provide a copy of this form to the member upon their request. Thereafter it is the responsibility of the member to complete the "member's portions" and have their former municipal employer complete the "employer's portion" of the form. The completed form should be sent to this office at the following address: Retirement & Benefit Services Division, Municipal Employees Retirement System Unit, 55 Elm Street, Hartford, CT 06106. When this office receives the purchase request, a copy of the purchase form will be returned to the employee to acknowledge its receipt.
IV. Purchase Cost Factors and Payment Procedures
Assuming that eligibility to make the purchase is established, the cost to the member will be two and one-quarter per cent or five per cent, as appropriate to their current MERS membership contribution rate, on the salary for the period of such former service plus the actuarial cost necessary to fund the increased benefits payable by reason of such purchase, and interest at the rate of six and one-half per cent, compounded annually on such payment. The cost will be based on an assumed retirement effective date.
An invoice will be sent to the member reflecting the estimated cost to obtain the credit based upon the assumed retirement effective date along with instructions to the member on how to complete the purchase. If the member does make the purchase, an acknowledgement of receipt of the payment will be sent to the member and to the current municipal employer. When the member actually retires, the cost of the purchase will be reviewed and recalculated, if necessary. If there is an increase in the cost, no credit will be given in the MERS pension calculation until the full purchase payment is received by the Division; if there is a decrease in the cost, the member will be refunded. Please share this payment information with the member; also advise the member that since the purchase cost reflects the present day value of the prior service, it is likely to be perceived by the member as expensive.
As you commence administration of this purchase provision, please bear in mind the two critical features contained in Section 2 of Public Act No. 03-138: (1) Both the employer and employee contributions must reside in the retirement fund of the former municipality and (2) the employee cannot receive multiple credit for the same period of service. Questions concerning the information contained herein may be directed to the Division's Municipal Employees Retirement System Unit at (860) 702-3500.
Very truly yours,
STATE EMPLOYEES RETIREMENT COMMISSION
NANCY WYMAN, SECRETARY EX OFFICIO
Steven Weinberger, Director
Retirement & Benefit Services Division
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