RETIREMENT & BENEFIT SERVICES DIVISION MEMORANDUM

June 11, 1997

TO THE HEADS OF ALL STATE AGENCIES

I. INTRODUCTION

On June 5, 1997, as part of the 1997-1999 biennial budget, an Early Retirement Incentive Program (ERIP) was enacted for certain members of the Alternate Retirement Program (ARP) who retire during a limited window of opportunity.
The purpose of this memorandum is to discuss (1) ERIP content and eligibility requirements pertaining to ARP, (2) administration and implementation of the ERIP provisions as they apply to ARP, and (3) general ARP retirement information.

II. ERIP CONTENT AND ELIGIBILITY REQUIREMENTS PERTAINING TO ARP

The 1997 ERIP is available to an ARP member:

1. Who is a full-time or part-time state employee on the business day immediately preceding his or her effective date of retirement; and
2. Who is a least fifty-two years of age on or before August 1, 1997 with a minimum of ten years of retirement credit in the Connecticut ARP prior to August 1, 1997; and
3. Who elects to retire on or after April 1, 1997 and on or before August 1, 1997, provided that the member's written application is received by the Retirement & Benefit Services Division (Division) prior to the effective date of retirement.

If these eligibility requirements are met, the ARP member will receive an additional 12% of his or her final average earnings, as defined under the State Employees Retirement System (SERS), in five (5) equal annual lump sum payments. The Retirement & Benefit Services Division will issue the lump sum payments directly to the member. The first payment will be made in October 1997, and annually thereafter with the last payment occurring in October 2001.

As in the case of retirement supplements paid to participants in the 1989 Retirement Incentive Program, ARP incentive payments are being treated by the Division as taxable income; accordingly, they will be reported to the State of Connecticut Department of Revenue Services and the Internal Revenue Service. A 1099R Form will be issued to the member for each of the five affected years. ARP members should address any questions concerning the taxable nature of these payments to their tax advisors.

III. ADMINISTRATION AND IMPLEMENTATION OF ERIP PROVISIONS AS THEY APPLY TO ARP

Following notification by the ARP member of his or her intention to retire under the ERIP, the agency and the member must complete the following for submission to the Retirement & Benefit Services Division, 55 Elm Street, Hartford, CT 06106, Attention: James Schnell:

1. The worksheet contained in Attachment "A" to this memorandum (please reproduce the attached copy of this form for use);
2. Form CO-898 entitled "Application for Retirement Benefits" using the version contained in Attachment "B"; please photocopy as needed. Service credit should be shown in Part II; periods of leave of absence without pay should also be clearly identified in Part II. As mentioned earlier, the incentive payment is based upon the "final average earnings" as defined in SERS. Final average earnings are the average of the three highest paid years of service. Any twelve consecutive month period equals one year. The actual earnings should be utilized; earnings cannot be inflated to full-time for part-time employees. When calculating the average earnings, no one year's earnings commencing January 1, 1986 can be greater than 130% of the average of the preceding two years. Note that mandatory overtime earnings are not subject to this limitation. Also, the average earnings must reflect when the monies were actually "earned", not when paid; therefore retroactive adjustments must be properly apportioned. The final average earnings should be shown in Part III.
3. Form CO-744, entitled "Choice of Health Services after Retirement".
4. Federal W-4P.
5. State CT-W4P.

A copy of the member's birth certificate or acceptable substitutes with affidavit must be included with the above paperwork. All required forms and documents must be received by this Division prior to the retirement effective date selected.

IV. GENERAL ARP RETIREMENT INFORMATION

Agency Personnel/Payroll Officers should also advise ARP members retiring under the ERIP of the following:

1. Calculation of the incentive payments shown on Attachment "A" are subject to audit and correction at time of retirement.
2. Payments for accrued sick and vacation days (if any) will be made in accordance with existing rules.
3. Their entitlement to retiree health insurance (assuming they are eligible for such coverage) under the provisions of the SEBAC V agreement as if they had retired on or before June 1, 1997.
4. Their responsibility to notify the Division of any change to their addresses through October 2001 in order to ensure proper receipt of the annual incentive payments and 1099R forms.
5. In the event that an ARP member becomes deceased prior to the completion of all installment payments, the remainder will be paid in a lump sum to such member's estate.
6. That reemployment by the State of Connecticut for more than 120 working days in any calendar year between their retirement date and September 2001 will result in forfeiture of any remaining incentive payments.
7. In order to begin receipt of ARP annuity payments, the members must make arrangements directly with TIAA-CREF, the company that underwrites the ARP.

V. CONCLUSION

A message concerning the 1997 ERIP will be included with paychecks dated June 20, 1997 and July 3, 1997; a copy of the check insert appears in Attachment "C" to this memorandum.

Please do not direct employees with inquiries concerning the ERIP to this Division; instead, share with employees the information contained in this memorandum. General questions which agencies are unable to answer may be addressed to James Schnell, Coordinator of the ARP, at (860) 702-3508.

Very truly yours,

STATE EMPLOYEES RETIREMENT COMMISSION
NANCY WYMAN, SECRETARY EX OFFICIO

BY:

Steven Weinberger, Director
Retirement and Benefit Services Division

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