CONNECTICUT STATE EMPLOYEES RETIREMENT SYSTEM TIER III SUMMARY PLAN DESCRIPTION (SPD)

YOUR PLAN MEMBERSHIP

TIER III COVERS STATE EMPLOYEES FIRST HIRED ON OR AFTER JULY 1, 2011

Tier III covers employees first hired on or after July 1, 2011 except for teachers and certain employees in higher education who are eligible for and elect to participate in another retirement plan or system. If you were hired before July 1, 2011, whether you participate in the Tier I, Tier II, Tier IIA or Tier III Plan depends upon several factors. If you are uncertain as to which plan you participate in, please contact your agency's Human Resources or Payroll Office.

New Employees

If you were first hired into state service on or after July 1, 2011, you are automatically covered under the Tier III Plan as of your date of employment, unless you are eligible for and elect to participate in another retirement plan or system.

Rehired Employees

If you worked for the state as a Tier I, Tier II or Tier IIA member, left your job, then were rehired on or after July 1, 2011, Tier III Plan membership was mandatory as of the date you were rehired unless:

• you already earned and retained your right to a vested retirement benefit from the Tier I, Tier II or Tier IIA Plan due to your prior period(s) of state service (this means a retirement benefit over and above your own contributions, if any); or
• you returned to state service after a period during which you were receiving state retirement benefits, including disability retirement benefits, from the Tier I, Tier II or Tier IIA Plan; or
• the time you were away from state service is less than your prior actual state service or 5 years, whichever is greater.

In these exceptions, you resumed membership in the Tier I, Tier II or Tier IIA Plan based upon your original membership.

Teachers and Professional Staff

If you are a state teacher or a professional staff member in higher education as defined by the Connecticut General Statutes, Section 5-160(g) employed by the state on or after July 1, 2011, you are covered under the Tier III Plan unless are eligible to and elect membership in either the Connecticut Teachers Retirement System or, if you are in higher education, the hybrid plan or the alternate retirement program. If you are eligible to do so, you must elect one of the other retirement plans within 60 days after your date of employment, or you automatically become a member of Tier III and you will be responsible for mandatory Tier III retirement contributions retroactive to your date of employment. You can be an active member of only one state retirement system.

Judges

Judges appointed to the Connecticut Supreme Court, Appellate Court or Superior Court become members of the Judges, Family Support Magistrates, and Compensation Commissioners Retirement System.
If you were covered by Tier III before your appointment to the Supreme Court, Appellate Court or Superior Court and had accrued at least 10 years of credited service under Tier III, you may elect to remain a member of the Tier III Plan. Or, if you had withdrawn from Tier III, you may elect to be reinstated as a Tier III Plan member. You may make either such election any time within 10 years after your initial appointment as a judge. In determining your Tier III benefit, you will receive credit for your years of service as a judge.

CONTRIBUTIONS TO THE PLAN

YOU AND THE STATE SHARE THE COST OF YOUR RETIREMENT BENEFITS

By You

Contributions for membership in the Tier III Plan are based on your annual salary. Salary includes all pay you receive from the state as a Tier III member. Federal law (IRC Code Section 401(a)(17)) imposes a limitation on earnings covered for retirement purposes. For 2011 this limit is $245,000; for 2012 the limit is $250,000. No contributions will be taken on earnings above this limit.

Generally, if you are employed by more than one state agency at the same time, all the monies you receive from all state agencies are considered to be salary.

As a Tier III member you contribute two percent (2%) of your total annual salary unless you are in a position designated as hazardous duty. If you are in a hazardous duty position, you contribute five percent (5%) of your total annual salary. In both cases, the contributions are made on a pretax basis.

By The State

Your contributions pay only part of the cost of your retirement benefits. The State of Connecticut pays the remaining cost.

Your Beneficiary

It is important for you to name a retirement beneficiary or beneficiaries to receive any lump sum benefit payment as well as any salaries that may be due if you should die while you are an active state employee. This designation may be changed any time you wish. To name or change your retirement beneficiary, contact your agency's Human Resources Office for the proper forms.

SERVICE AND BENEFIT INFORMATION

ACTUAL STATE, VESTING AND CREDITED SERVICE

As a member of Tier III you will accrue three types of service: actual state, vesting and credited service. You are "vested" or eligible for immediate or deferred retirement benefits when you meet specific service requirements. Actual state and vesting service determine your eligibility for benefits. Credited service will be used to compute such benefits.

ACTUAL STATE SERVICE

Actual state service includes all years and months of state service for which you have paid contributions subject to permanent break in service rules outlined in the section entitled "Breaks in Service and Permanent Breaks In Service Rules." Actual state service begins building up from your employment or reemployment commencement date. Your employment commencement date is the date you first work an hour for which you are paid or entitled to pay by the state and for which you have paid retirement contributions. Your reemployment commencement date is the date you return to work after you terminate state employment and you first work an hour for which you are paid or entitled to pay and for which you have paid contributions. Actual state service continues building all the way to your severance from service date (the date your state employment ends).

Also counted as actual state service are all periods of time when you received temporary Workers' Compensation (excluding specific indemnity awards) or Disability Compensation under Connecticut General Statutes, Section 5-142 and any unpaid leave consisting of individual prescheduled days or partial days off as provided by the Voluntary Schedule Reduction Program pursuant to Section 5-248c of the Connecticut General Statutes. Not counted are periods of absence without pay for other reasons.
You earn one year of actual state service when you work 12 calendar months for the state. If you are a state teacher and work a full academic year, equivalent to at least 10 months of service, you will receive credit for the full calendar year.

VESTING SERVICE

You Earn a Vested Right to a Benefit After 10 Years of Vesting Service

Vesting service includes your actual state service. You also earn vesting service for a period(s) of severance of less than 12 months.

In addition, you may receive vesting service through a purchase for various types of leaves and service including the following:

• eligible military service
• eligible full-time service to other states
• leaves of absence without pay for military service or personal and family leaves pursuant to Section 5-248a of the Connecticut General Statutes
• eligible prior Connecticut state service not succeeded by a permanent break for which contributions in Tier III were paid and later refunded

After you have ten years of vesting service, you have earned a vested right to a benefit.

CREDITED SERVICE

Credited Service is Used to Calculate Your Retirement Benefit

Credited service includes all your vesting service except:

• any period between the time you leave state service and return to state service including periods of severance of less than 12 months.

Credited service may include:

• any period of your municipal service if you were a member of the Connecticut Municipal Employees Retirement System, provided you have at least ten years vesting service under Tier III and have not and will not receive any retirement allowance from the municipal system for this municipal service. Refer to the section entitled "Detailed Information on Purchase Opportunities" for more information.

Special rules apply to hazardous duty members of Tier III who are detectives, chief inspectors, or inspectors in the Division of Criminal Justice, or chief detectives in any other division, with respect to former service to a municipal police department. Please contact your agency's Human Resources Office for additional information.

Breaks In Service And Permanent Breaks In Service Rules

A break in service occurs if you sever your state employment and do not return to state service within one year. You do not receive any retirement credit for a break in service.

Suppose you leave your job and are rehired within 12 months, the period between the time you leave and the time you return will count toward your total years of vesting service when determining your eligibility to retire. But it does not count as actual state service and will not be used as credited service when calculating your retirement benefit amount. If you terminate while on a leave of absence, you must return to state service within one year after the first day of your absence to avoid a break in service.

A permanent break in service occurs if:

• you are not vested, and
• you have had a break in service of more than five years, and
• the period from your severance from service date to your reemployment commencement date equals or exceeds your Tier III vesting service prior to that severance.

If you have had a permanent break in service, you will not receive any retirement credit for service preceding the permanent break.

Example: You worked as a Tier III member for four years, left and were rehired after six years of severance. Since you were gone longer than five years and more than your total years of prior vesting service, your service before reemployment will not be counted for any retirement credit.

Alternatively, if you did not have a permanent break in service and did not withdraw your contributions (or if withdrawn, you restored them) your years of service before and after reemployment are added together after you are rehired.

Example 1: Let's say you build up three years of service. You leave state employment and after four years, you are rehired. Since you were gone less than five years, provided your contributions were retained or are restored, your years of service before and after reemployment are added together after you are rehired.

Example 2: Suppose you build up seven years of vesting service; you leave state employment and are rehired after six years. Since you were gone less than your prior vesting service, provided your contributions were retained or are restored, your years of service before and after reemployment are added together after you are rehired.

Now, assume you are vested in Tier III when your state employment ends and you are later rehired. Your years of service, before and after reemployment, are automatically added together.

Reference Chart for Actual State, Vesting And Credited Service

The following chart is a quick check reference chart showing varying types of service and whether each qualifies as actual state, vesting or credited service in Tier III. Please contact your agency Human Resources or Payroll Officer regarding any additional statutory requirement which may also need to be met before actual state, vesting or credited service can be utilized.

* If you received a refund of your Tier III retirement contributions for prior service, you must restore the contributions with interest in order to include as actual state, vesting, and credited service.

Detailed Information on Purchase Opportunities

You may request a purchase of retirement credit on the appropriate form provided by your employing agency's human resources or payroll office. After submission of the completed request form with all required documentation to the Retirement Services Division, you will either be sent an invoice to complete the purchase or a letter explaining why you do not qualify.

Invoices provide any payment options available; in some cases payroll deductions are permitted. Requesting a purchase does not obligate you to pay the invoice. However, no credit is allowed for any purchase unless all contributions and interest are paid in full within the time frames prescribed.

Note: Although the deadline to apply for some purchase opportunities is any time before retirement, the cost of the purchase may increase as the period between your date of hire and the date you apply for the purchase increases.

The following summarizes important information about purchase opportunities:

1. Prior military service

• description: active duty served during war-time or national emergency in the United States Army, Navy, Marine Corps, Coast Guard or Air Force for which you received an Honorable Discharge and for which you are not and never will be entitled to a pension from another source other than the aforementioned Armed Forces.
• documents required: A DD-214 from the federal government.
• deadline to apply: Within one year of the commencement of your first period of state service.
• credit allowed: Vesting and credited service for all war-service plus three years national emergency service to a maximum of ten years.

2. Prior service to another state

• description: Prior full-time employment with another State provided that State has similar retirement credit provisions for former Connecticut state employees. If you received or will receive any benefit, including a lump-sum payment, for your service to the other State above and beyond your own retirement contributions and interest, you cannot purchase retirement credit in Tier III for such service.
• documents required: An official statement from the other state specifying that you were full-time, the actual dates of your service and the retirement system to which you belonged.
• deadline to apply: Any time before retirement.
• credit allowed: Vesting and credited service to a maximum of ten years but no more than one year of out-of-state service allowable for each two years of Connecticut state employment.

3. Service to a Connecticut municipality

• description: Employment with a Connecticut municipality during which you were a member of the Connecticut Municipal Employees Retirement System (CMERS), provided either your retirement contributions are withdrawn from CMERS or transferred directly with interest to Tier III.
• documents required: An official statement from the municipality specifying the actual dates of your service and the portion of a full-time schedule you worked.
• deadline to apply: Any time before retirement.
• credit allowed: While you may purchase unlimited credited service, it does not count until you have obtained a minimum ten years of vesting service, exclusive of the municipal service during which you were a CMERS member.

4. Restoring prior Tier III retirement credit

• description: All retirement credit obtained in Tier III during a period of prior Connecticut state employment for which your contributions were refunded, provided there has not been a permanent break in service.
• documents required: An official statement from your former agency specifying the actual dates of your service, the position(s) held, and the portion of a full-time schedule you worked.
• deadline to apply: Any time before retirement.
• credit allowed: No limitation with respect to prior Connecticut state employment. If your restoration includes one of the other types of service, it is subject to the credit allowed for that type of service.

5. Credit for qualifying leaves of absences without pay taken for personal or family illness

• description: Leaves that qualify under applicable law, collective bargaining agreements or other regulations that were granted for the protection or improvement of the employee's health, including maternity, or granted for family illness or parental reasons.
• documents required: Copies of the official personnel action documents approving the leave, reflecting its type and confirming its duration.
• deadline to apply: Any time before retirement.
• credit allowed: In monthly increments to a maximum of fifteen months of credit in any five year period.

6. Credit for qualifying leaves of absences without pay taken for military service

• description: Leaves without pay taken for active duty in the United States Army, Navy, Marine Corps, Coast Guard or Air Force provided the individual returns to state service within ninety days of honorable release.
• documents required: A DD-214 from the federal government plus copies of the official personnel action documents approving the leave, reflecting its type and confirming its final duration.
• deadline to apply: Any time before retirement.
• credit allowed: No limitation.

Part-Time Service

If you have had part-time service, you should know that:

• for retirement eligibility purposes, your part-time service will be treated as if it were full-time service. This means that when you have completed ten years of vesting service, regardless of your exact schedule, you will be vested for a retirement benefit.
• for retirement income calculation purposes, however, your benefit will be adjusted to reflect the portion of the standard full-time schedule you worked throughout your state employment.

Benefit Calculation Factors

Your basic benefit is calculated by using a formula that takes into account your average salary, your average salary in excess of the year's breakpoint, and your credited service.

Average Salary

To determine your average salary, use your five highest paid years of credited service. Any 12 consecutive months period equals one year. For example, May 1st through the following April 30th equals one year. Add together your earnings from your five highest paid years, then divide this total by five.

When calculating your average salary, no one year's earnings can be greater than 130% of the average of the preceding two years. Effective July 1, 2014, this limit will be 150% if you have mandatory overtime earnings. You may be eligible for a refund of contributions made on salaries you earned during the three highest paid years which are not used in calculating your benefit.

Reminder: Federal law imposes a limitation on earnings covered for retirement purposes. For 2011 this limit is $245,000. Salary above this limit can not be included in the calculation of your average salary and no contributions will be taken on earnings above this limit.

Breakpoint

This table shows you the earnings breakpoints through the year 2013*.

*Important Note: The 2011 SEBAC Agreement provides for a modification to the breakpoint for service earned on and after July 1, 2013.

In the benefit formula, you take the breakpoint for the calendar year in which your last severance from state service occurs.

Minimum Guarantee

If you retire with 25 or more years of vesting service, the Plan provides a minimum benefit; your basic monthly benefit will equal the result of the formula calculation or $360, whichever is greater. This benefit will be pro-rated for members with 25 or more years of service which includes at least some part-time service.

IRC 415(b) Defined Benefit Limitations

IRC Section 415 is a federal provision that limits the amount of annual retirement benefits an individual can receive from a qualified defined benefit plan. The annual retirement benefits payable from Tier III are subject to the dollar limit imposed by Section 415(b). The 2011 calendar year benefit limit is $195,000 for members aged 62 to 65; the 2012 calendar year benefit limit is $200,000 for members aged 62 to 65. The benefit limit is typically adjusted downward for retirements beginning before age 62 and upward for retirements beginning on or after age 65. Special rules apply under Section 415(b) for certain "qualified police and firefighters."

Important Note: Many of the classifications designated as hazardous duty under SERS are not considered "qualified police and firefighters" and are subject to the Section 415(b) benefit limitation for regular governmental employees.

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