Office of the State Comptroller
Retirement Services Division

Tier II/IIA - Retirement Basics

Revised July 2014

Introduction
Plan Membership
Eligibility Requirements
Benefit Calculation
Survivor Benefits
Insurance: Health, Dental, and Life
The Retirement Process
Sources of Information
Tier 2 Estimator

Introduction

Welcome to the Tier II/IIA Retirement Counseling Workshop. Our goal is to provide the same information in this setting that we provide in our traditional counseling sessions. This is not meant to cover every retirement provision or detail. But rather, this is a general explanation of the most important retirement issues and considerations.  This workshop incorporates the latest changes to the Tier II and IIA retirement plans as a result of the SEBAC 2011 agreement.

If you fall within our target audience-current Tier II/IIA state employees transitioning directly from state employment into retirement-we hope to provide you with the information you will need to make informed retirement decisions.

While this workshop is meant to be helpful and informative, nothing contained in it should be considered a promise or contract. The applicable retirement statutes, regulations, and decided cases that construe them are the governing law. The Retirement Services Division reserves the right to revise, change or revoke without notice the information, rules and procedure detailed in this workshop.

Plan Membership

Tier II

Tier IIA

Eligibility Requirements

For Retirement Dates through 6/1/2022***

Retirement Type Age And Service Requirements For Commencement Of Pension Benefits Entitled To COLA
Normal Age 60 with 25 Years of Vesting Service Yes
Age 62 with 10 Years Vesting Service Yes
Age 62 with 5 Years Actual State Service (effective 7/1/97) Yes
Age 70 with 5 Years Vesting Service (Tier II only) Yes
Early Age 55 with 10 Years Vesting Service Yes
Vested Rights**
 Tier II
Age 55 with 10 Years Vesting Service Yes
Age 65 with 5 Years Actual State Service (effective 7/1/97) Yes
Vested Rights**
Tier IIA
Age 55 with 10 Years Vesting Service
Yes (If 10 years of Actual State Service)
Age 65 with 5 Years Actual State Service No

** Members who left state service after satisfying the minimum service credit requirement, but before satisfying the minimum age requirement.

*** Effective July 1, 2022 Normal Retirement Age will change. Please see SEBAC 2011 agreement.

Benefit Calculation


Tier II/IIA Benefit Estimator
Normal v. Early Retirement
Early Retirement Reduction Formula
Retirement Service Credit Overview
Breaks in Service
Retirement Service Credit
Part-Time Service
Average Salary
Breakpoint
Tier II/IIA Benefit Formulas
Normal Tier II/IIA Benefit Formula
Cost of Living Adjustment 

Tier II/IIA Benefit Estimator:

Normal v. Early Retirement for retirement dates through 6/1/2022:

Normal Tier II/IIA Benefit Formula:

.014 X AVERAGE SALARY UP TO THE BREAKPOINT
Plus (+)
.0183 X AVERAGE SALARY ABOVE THE BREAKPOINT

Times (X)
YEARS OF CREDITED SERVICE TO MAXIMUM OF 35 YEARS

AND (+)
.01625 X AVERAGE SALARY X YRS of Service above 35

divide By 12 ( /12)
 
NORMAL MONTHLY TIER II/IIA BENEFIT

 

Early Retirement Reduction Formula:

NORMAL MONTHLY TIER II/IIA BENEFIT

Minus (-)
.005 X NUMBER OF MONTHS PRIOR TO NORMAL RETIREMENT AGE
(60 if >25 years; 62 if <25 years)
X NORMAL MONTHLY TIER II/IIA BENEFIT
Equals (=)
MONTHLY TIER II/IIA BENEFIT (AFTER EARLY RETIREMENT REDUCTION)

Example:

.

.014 X $73,400.00 = $1,027.60
 
AVERAGE SALARY UP TO THE BREAKPOINT  
Plus (+)

(+)
.0183 X $4,900.00

($78,300.00 - $73,400.00)
= $89.67
 

AVERAGE SALARY ABOVE BREAKPOINT

  $1,117.27
= $1,117.27 Times (X) 18.5
YEARS OF CREDITED SERVICE
= $20,669.50 Yearly or $1,722.46  Monthly  
MONTHLY BENEFIT   = $1,722.46
Minus (-)
.005 X $1,722.46 X 83 = $714.82
    MONTHLY   # MONTHS BEFORE AGE 62  
        MONTHLY BENEFIT = $1,000.00
        YEARLY BENEFIT = $12,000.00

Retirement Service Credit Overview:

Breaks in Service:

Retirement Service Credit:

Part-Time Service:

Average Salary

Breakpoint

For the Year: The Breakpoint Is:
2014
2015
2016
2017
2018
2019
2020
2021
69,200
73,400
77,800
82,500
87,500
92,800
98,400
104,300

Tier II/IIA Benefit Formula:

Cost of Living Adjustment

60% of the annual CPI-W increase up to 6%

PLUS

75% of the annual CPI-W above 6%

Survivor Benefits


Overview
Option D - Straight Life Annuity
Option A - 50% Spouse
Option B - 50% or 100% Contingent Annuitant
Option C - 10 Year or 20 Year Period Certain
Spousal Waiver
Benefit Payment Options and Health Insurance 

Overview

Option D - Straight Life Annuity

Option A - 50% Spouse

Option B - 50% or 100% Survivor

Option C - 10 Year or 20 Year Period Certain

Spousal Waiver

Benefit Payment Options and Health Insurance

Insurance: Health, Dental, and Life

General Eligibility Requirements for Health and Dental Insurance
Open Enrollment
Normal vs. Early Retirement
Available Health Insurance Plans - In-State Retirees
Available Health Insurance Plans - Out-of-Area Retirees
Medicare's Impact on Retiree Health Insurance
Health Enhancement Program (HEP)
Available Dental Plans
Group Life Insurance

General Eligibility Requirements for Health and Dental Insurance:

The eligibility requirements to receive Health Insurance in retirement were most recently modified through two collective bargaining agreements in 2009 and 2011 between the State and the State Employees Bargaining Agent Coalition (SEBAC). Due to the complexity of these agreements and the changes they made, please direct your questions concerning your eligibility for health insurance in retirement to your agency’s human resource area or to the Healthcare Policy and Benefit Services Division.

Open Enrollment

Normal vs. Early Retirement

Available Health Insurance Plans - In-State Retirees

Currently, in-state retirees must pay a retiree premium share for any of the POS plans, while the POE plans are offered at no retiree premium share for in-state retirees and their eligible dependents that retire at or have attained Normal Retirement age.

Available Health Insurance Plans - Out-of-Area Retirees:

Current year POS retiree premium shares are available by following this link.

Current health insurance plan options with no retiree premium share (assumes at Normal Retirement Age) include:

Point of Enrollment - Gatekeeper Plans    Point of Enrollment Plans    Out-of-Area Plans
UnitedHealthcare
  • Anthem State BlueCare POE Plus
  • UnitedHealthcare Oxford HMO  
  • Anthem State BlueCare POE
  • UnitedHealthcare Oxford HMO Select
  • Oxford USA Out of Area plan
  • Anthem Out-of-Area plan

Medicare's Impact on Retiree Health Insurance:

Health Enhancement Program (HEP)

The SEBAC 2011 agreement introduced a new program to enhance your ability to make the most informed decisions regarding your health.

Available Dental Plans

Group Life Insurance

The Retirement Process


Notification to Agency
Required Forms
Audit Process
Pension Checks
Agency Payouts
Re-Employment
5-142(a) Disability Compensation
Counseling Services
Other Resources 

Notification to Agency

 

Required Forms

Audit Process

Pension Checks

Agency Payouts

Re-Employment

5-142(a) Disability Compensation

Sources of Information

Counseling Services:

Other Resources: