Frequently Asked Questions - Municipality
The following is a list of subject areas which you can use to find answers to some commonly asked questions. You can navigate to each group of questions by clicking on the desired subject area.
Municipal Membership Questions
What Does A Municipality Need to Do To Pursue Memberships in CMERS?
The municipality should first contact CMERS at 860-702-3500. The municipality will be given general benefit and cost information about the CMERS as well as specific information regarding the application for membership process. The municipality will be asked to provide CMERS with:
1. Form CO-1074, entitled "Roster of Employees" which must be completed in order to obtain cost for membership information from the CMERS actuaries.
2. The initial fee schedule for actuarial charges associated with obtaining the costs of CMERS membership for those listed on the "Roster of Employees".
3. The application procedure for participation through a resolution or a collective bargaining agreement. Please note that the State Retirement Commission must approve the participation of a municipality in CMERS. The effective date of participation must be at least 90 days subsequent to the Commission's receipt of a properly executed resolution or collective bargaining agreement.
How Long Does the Application Process Take?
The application for membership process may take 6 to 12 months to complete.
CMERS will assist you in determining an effective date of membership, which
along with the "roster of employees" will be forwarded to the CMERS actuary.
What Are the Financial Requirements of CMERS membership?
The financial requirements of CMERS membership can be thought of as a three legged stool with the following three legs:
Service Contribution: This contribution varies from year to year and depends upon actuarial and financial experiences or changes in benefit provision. There are two components: (a) employer and (b) employee. The employer contributions are based upon the total payroll of gross pay received by all employees eligible for membership and forwarded monthly to CMERS. Employee contributions are deducted from each eligible employee's gross wages and forwarded monthly to CMERS. Employer contributions are actuarially determined and are a percentage of gross wages of payroll. It is paid monthly and subject to change as of July 1st each year. The employee contribution portion is currently set at 2¼% for Social Security participants and at 5% for employees not covered by Social Security. This employee contribution amount is set by the legislature and cannot change.
UAL: "UAL" is the municipality's unfunded accrued liability contribution. This amount can include contributions due for service prior to participation or for unfunded accrued costs associated with prospective membership. Such payments are usually determined by the CMERS actuaries prior to CMERS participation. This amount can be quite large depending on the number of employees and if past service is credited. It differs from the service contribution in that it is amortized over a fixed 30 year period and is paid on an annual basis. Municipalities may opt to accept a shorter term amortization. The CMERS actuaries will base the amortization on the requested term. A bill is sent to the municipality in June for July payment.
Please be aware that an adjustment to the UAL might become necessary if the data reported by the municipality on the original roster deviates substantially from the data eventually supplied on the initial entrants and reviewed during the first valuation. The municipality should also be aware that, while uncommon, certain changes to the actuarial assumptions, the actuarial funding methods, or to the fund's structure might produce revisions to the UAL for all CMERS participants.
Administrative fee: CMERS charges each participating municipality an annual fee of $90 per current employee and retiree to cover all administrative expenses. This fee represents the proportionate share of the cost of the administration of the fund and can change depending on the cost and the number of employees/retirees covered by CMERS. A bill is sent to the municipality in June for July payment.
How many valuations are required?
Cities and towns interested in joining CMERS must undergo (and pay for) the initial estimated actuarial valuation (and any "true-up" calculation if required). There are several things to note about the cost, first, it is based upon the number of employees in a group, department or classification. Second, the cost is applied to each valuation. For example, a valuation for a group of 25 firefighters with credit for past service will cost $1,000. However, a second valuation for a group of 25 firefighters without credit for past service will cost an additional $1,000.
Contribution and Fund Transfer Questions
Is there a State formula for municipal contributions?
It is important to first note that there is no State "formula" per se; rather, every year CMERS actuaries make an actuarial determination with regard to the appropriate service contribution. A municipality is obligated to pay all three legs of the CMERS stool although the UAL is less if only prospective hires or service are included. When the employee retirees, the municipality obligation ends with regard to the service contribution but the annual administrative fee still continues.
Is the municipality contribution weekly, monthly or annually? Is the employee deduction paid weekly, monthly or annually?
What are the wages upon which contributions are based?
Wages reported on the roster includes overtime and longevity payments. Employee contributions are based on gross pay and forwarded monthly to the CMERS. Employer contributions are forwarded monthly also and are based on the gross pay of all eligible CMERS members. Employee contributions are defines by state statute while employer contributions are adjusted each year on July 1.
We have a current defined benefit plan - can we transfer funds from that plan to CMERS?
If a municipality intends to transfer funds from a current plan to the CMERS the value of the funds must be presented with the roster for consideration by the CMERS actuaries. With regard to "past service" credit, CMERS must have monthly wages for the last ten years of service. If municipal wage records are not available on a monthly basis for that period, the municipality must provide as many years as possible on a monthly basis and W-2 earnings for the rest.
We have a current defined contribution plan - can we transfer funds from that plan to CMERS?
No, not at this time.
Are employee contributions made on a pre or post tax basis?
Employee contributions will be made on a post tax basis unless the municipality elects that such contributions be made on a pre-tax basis. Municipalities are given and asked to review the memorandum, entitled "Employer Pick-Up of Mandatory Employee Retirement Contributions", dated January 30, 2002, for information regarding the election process as well as the administrative issues associated with a municipality opting to join the MERS on a pre-tax basis. The "Member Contribution Pick-Up Election Form" must be completed by employers electing the pre-tax option for their MERS members and returned to the MERS Unit.
Employee Related Questions
How is membership in CMERS determined?
Membership in the Connecticut Municipal Employees Retirement System (CMERS) is governed by state statute. CMERS was established to prove a sound and efficient system for the payment of retirement benefits to municipal employees. On being hired by a participating municipality, municipal employees automatically become members of the system. Deductions are made by the municipality for each eligible employee, recorded in the member's account, and deposited with the state treasurer. By statute, members may purchase additional benefits for military and prior service with a participating municipality. Members may obtain a refund of their contributions upon resigning from CMERS. Municipal contributions belong to CMERS plan and are not refunded to an employee.
Are all employees required to be members?
When a municipality elects to participate in CMERS, all regular employees working twenty or more hours a week are required to be members. Conn. Gen. Stat. Sec. 7-425(5) states, in relevant part, that:
Therefore, the only employees of a participating municipality that are not required to be members of the CMERS are employees customarily working under 20 hours a week, teachers who are eligible for Teachers Retirement, and employees funded by CETA or similar work experience programs.
When can the municipality submit new names for membership? Can it submit new names throughout the fiscal year or only during certain open periods?
The municipality can submit new names as a result of normative hiring processes (e.g. someone leaves and a replacement is hired) which are added to the payroll (or roster). However, if new departments or bargaining units or wholesale classes of employees are added, CMERS reserves the right to require a new valuation (which may change the UAL) before allowing the names to be added to the system.
Does an employee need to pass a medical exam prior to joining CMERS?
No. Although there is no medical examination required for placement on the CMERS roster, benefits under Conn. Gen. Stat. Sec. 7-433c may require a baseline "entry" physical examination for policemen or firemen seeking benefits under this specific section of the statute.
How is a disability pension approved? Can a new employee who is hurt, be declared disabled and receive some type of life pension?
The state employees' retirement commission's Medical Examining Board (MEB) accepts applications for disability retirement or petitions for service connected disability retirement with appropriate medical documentation. (See Conn. Gen. Stat. Sec. 5-169). The MEB makes the determination as to whether a disability is service connected and its decision is final. An employee is eligible for a service connected disability pension immediately upon date of hire - there are no vesting requirements for a service connected disability pension. However, non-service connected disability retirement pensions require 10 years vesting for eligibility.
Are lump sum payments at retirement considered by CMERS in benefit calculation?
Lump sum payments at retirement for accumulated sick and vacation are not considered by the CMERS in the benefit calculation. Lump sum "retroactive" payments are spread over the actual earning period when determining the three highest years.
What forms need to be completed by employees?
Form CO-931, "Designation of Retirement System-Tier-Plan-Beneficiary", must be completed by each new member enrolling in the MERS. Thereafter, the Form CO-931 must be completed by members with name, address and/or beneficiary changes. The municipality must also complete the signature section of each Form CO-931 (specifically, numbers 36, 37 and 38) and send the fully completed forms to the MERS Unit.
Important: Each time an employee changes address, marital status, death or beneficiary, a new CO-931 mist be completed and sent to CMERS.
Do the municipality and CMERS keep dual records or is the MERF Plan, similar to State Teacher's Plan, which is completely administered by the State?
The municipality must keep records such as payroll, leave, position, etc. so that CMERS can properly determine and verify pension and related benefits. After the employee retires, CMERS keeps the appropriate records unless the municipality offers the retire health insurance, life insurance or other benefits.
How will the required GASB disclosures be addressed? Are there any Year-End Audit requirements?
The CMERS actuaries do the required GASB disclosures relating to entire CMERS system. As long as we have the monthly reports submitted to us by the municipality, we generally do not require any other additional information. CMERS does reserve the right to ask for missing or additional information on active employees if needed. CMERS members are given copies of these annual disclosures and valuations.