RETIREMENT & BENEFIT SERVICES DIVISION MEMORANDUM

August 21, 1998

TO THE HEADS OF ALL STATE AGENCIES

1. Introduction
   
   Most State employees first hired on and after July 1, 1997 join Tier IIA, the State Employees Retirement System's (SERS) newest defined benefit plan. Employee contributions are required in Tier IIA at a rate of 5.0% of salary for hazardous duty members and 2.0 % of salary for all other Tier IIA members. Generally, retirement credit accrues for Connecticut state service while the Tier IIA member is actively employed and making the required retirement contributions to SERS.
   
   Tier IIA members may also obtain additional retirement credit or reinstate retirement credit. The additional retirement credit provisions resemble those contained in Tier II, the mostly non-contributory plan that covers the majority of employees hired from July 2, 1984 through June 30, 1997. However, in order for Tier IIA members to obtain additional retirement credit, they must purchase the retirement credit by paying required contributions and statutory interest.
   
   The intent of this memorandum is to provide:
   
   • detailed information with respect to the general retirement credit purchase opportunities available to Tier IIA members, and
     
     
   • guidance on the use of the new forms: CO-1088, entitled "Retirement Credit Purchase Request for Prior Miscellaneous Service - Tier IIA Members Only"; CO-1089, entitled "Retirement Credit Restoration Request - Reemployed Tier IIA Members Only"; CO-1090, entitled "Retirement Credit Purchase Request for Qualifying Leaves Without Pay - Tier IIA Members Only". Copies of the new forms are attached hereto.
   
   Section II of this memorandum is devoted to a detailed description of the purchase opportunities and addresses eligibility requirement and cost factors. Section III provides instructions for use of the new Tier IIA purchase request forms.
   
   The cost to Tier IIA members for all purchases represent post tax dollars. These purchase provisions do not have deadlines associated with them except as specified herein with respect to military service.
   
2. Description of Tier IIA Purchase Opportunities
   
   1. Miscellaneous Service Credit - Other than Connecticut state employment
      
      When an employee joins Tier IIA, there are three types of prior service that may be purchased for retirement credit assuming all requirements are met.
      
      
      1. Prior active duty military service: A Tier IIA member is eligible to purchase vesting and credited service for active duty military service during war-time or national emergency in the United States Army, Navy, Marine Corps, Coast Guard or Air Force for which they received an Honorable Discharge, provided the member has not received and will not receive a pension from another source for the same service. However, the member must apply to purchase prior military service within one year of the date he/she first commenced Connecticut state service as a Tier IIA member or December 31, 1998, whichever is later. The purchase must then be completed by remitting the sum due within the time frames provided on payment notices.
         
         
         The cost to the Tier IIA member to purchase each year of qualifying military service will equal four percent of the annual full-time rate of compensation when first hired into Connecticut state service plus a five per cent interest charge per year from the date such service was rendered to date of purchase.
         
         
         A Tier IIA member is limited to receiving retirement credit for military service equal to war-time service plus three years of national emergency service. In any event, a Tier IIA member may not obtain more than ten years credit in the aggregate for all military service.
         
         
      2. Prior full-time employment with another state: A Tier IIA member is eligible to purchase vesting and credited service for active full-time employment with another state, provided the member has not received and will not receive a pension from another source for the same service, and the other state makes similar retirement credit provisions for former Connecticut state employees.
         
         
         The cost to the Tier IIA member to purchase each year of qualifying service with another state shall be six per cent of the annual full-time rate of compensation when first hired into Connecticut state service plus a five per cent interest charge per year from the date such service was rendered to date of purchase.
         
         
         A Tier IIA member is limited to receiving ten years credit in the aggregate for all service to other states, and not more than one year of this type of service shall be counted for each two years of credited Connecticut state service.
         
         
      3. Prior Connecticut municipal employment: A Tier IIA member is eligible to purchase credited service for a prior period of municipal service during which he/she was a member of the Connecticut Municipal Employees Retirement System (CMERS), provided the member has not received and will not receive a pension from another source for the same service.
         
         
         The cost to the Tier IIA member to purchase each year of qualifying municipal service will equal the employee's contributions to CMERS plus a five per cent interest charge per year from the date such service was rendered to date of purchase.
         
         
         Purchased municipal service cannot be added to the Tier IIA member's credited service until said member has at least ten years of vesting credit, exclusive of such municipal service.
         
         
   2. Restoration of prior Tier IIA vesting and credited service
      
      A former member of Tier IIA who is reemployed before a permanent break has occurred may restore retirement credit for their prior Tier IIA vesting and credited service for which retirement contributions and interest were withdrawn. A permanent break in service occurs if there is a break in service, the individual is not vested, and the period from severance from service date to reemployment commencement date equals or exceeds the Tier IIA vesting service prior to that severance, or five years, whichever is greater.
      
      
      Usually, the cost to the Tier IIA member to restore retirement credit shall equal the full amount of the withdrawal plus interest at the rate of five percent per annum calculated from the date of withdrawal to date of restoration. In the event that a Tier IIA member contributing at the non-hazardous duty rate (2%) is restoring retirement credit for prior hazardous duty service (5%), the cost of the restoration is adjusted.
      
      
   3. Leaves of absence without pay
      
      As a general rule, leaves of absences without pay will diminish the Tier IIA member's vesting and credited service unless it is the type of leave that can be purchased for retirement credit, and the employee completes such purchase. There are two exceptions to this rule: retirement credit is awarded "free" to the employee for leaves during which the individual is receiving qualifying temporary Workers' Compensation or Disability Compensation or leaves taken in accordance with Connecticut General Statutes, Section 5-248c entitled "Voluntary schedule reduction program".
      
      
      The following types of leaves without pay can be purchased for vesting and credited service:
   
   
   1. For personal or family illness: A Tier IIA member may purchase vesting and credited service for leaves granted for the protection or improvement of the member's health, leaves granted pursuant to C.G.S., Section 5-248a, entitled: "Family and medical leave from employment"; or leaves granted for family illness or eligible parental leave as provided in an applicable collective bargaining agreement.
      
      
      The length of such leaves is an important factor in determining a Tier IIA member's right to obtain retirement credit as well as the cost to the individual.
      Qualifying leaves of thirty calendar days or more are purchasable in one month increments. As an example, if a member is on a leave without pay for a period of sixty-three consecutive calendar days, sixty days of such leave are purchasable. In the case of such leaves without pay of a month or more, the contributions required from the member will be two percent or five percent, whichever is applicable, of his monthly salary at the time such leave was taken with five percent interest per year from the period of the leave to the date of the purchase.
      
      
      Members may also purchase qualifying leaves of absences without pay, each of which is less than thirty consecutive calendar days in duration, if the cumulative total of individual working days equals one month. In such case, one month is considered to be a total of twenty-two working days. If the purchase is composed of several leaves totaling one month, the cost to the member will be two or five percent, whichever is applicable, of the daily rate of salary at the date of application to receive credit, multiplied by twenty-two without an accompanying interest charge.
      
      
      Not more than fifteen months of vesting and credited service in any five year period may be obtained in combination for personal illness, family leave and parental leave.
      
      
   2. For military service: A Tier IIA member may purchase vesting and credited service for a leave without pay during which said member served in the Armed Forces as described in Section II-A-1 in this memorandum provided there is a return to state service within ninety days of honorable release from active duty.
      The cost to the Tier IIA member to obtain the retirement credit will equal two percent or five percent, whichever is the applicable contribution level, plus five percent interest per annum from the period of the leave to the date of the purchase.
      
      
      For retirement purposes, not more than the war-time service plus three years shall be counted as vesting and credited service for military leave without pay.
      
      
3. Introduction of Tier IIA Purchase Request Forms and Instructions
   
   There are three Tier IIA Purchase Request Forms, each designed to address retirement credit issues that may arise at different stages in the Tier IIA member's career. These forms should be copied for use until they are available from Vanguard Direct which will take approximately three weeks from the date of this memorandum.
   

• CO-1088 entitled "Retirement Credit Purchase Request For Prior Miscellaneous Service-Tier IIA Members Only". Every Tier IIA member of the State Employees Retirement System hired prior to September 1, 1998 must complete a Form CO-1088 and the form should be processed in accordance with the directions on it. On the form, he/she must apply to purchase miscellaneous service which was rendered prior to the commencement of Connecticut state service and sign the "Member's Request", or acknowledge that the form has been read by signing the "Member's Acknowledgment".
  
  
  On and after September 1, 1998, each newly hired employee's Form CO-931 sent to the Retirement & Benefit Services Division must be accompanied by a Form CO-1088.
  
  
• CO-1089 entitled "Retirement Credit Restoration Request - Reemployed Tier IIA Members Only". The reemployed Tier IIA member must make application on Form CO-1089 to restore retirement credit for prior service for which the member received a refund of retirement contributions.
  
  
• CO-1090 entitled "Retirement Credit Purchase Request for Qualifying Leaves Without Pay - Tier IIA Members Only".

It is imperative that all retirement credit purchase request forms be submitted to the Retirement & Benefit Services Division with the required documentation listed on said forms. When the purchase application is completed for submission to the Retirement & Benefit Services Division, the agency should retain a copy of the form in the individual's personnel file.

Assuming that the eligibility to obtain credit is established, an invoice will be sent to the member reflecting the cost to obtain the credit. Any available payment options will be presented along with instructions to the member on how to complete the purchase.

4. Summary
   
   Purchase opportunities are available only to active and vested members of Tier IIA, not retirees or any other payees.
   
   In the processing of requests from active Tier IIA members, agency personnel may call the Retirement Credit Purchases Unit at (860) 702-3511 or (860) 702-3512 with questions that may arise.
   
   The Division plans to issue a check enclosure for current Tier IIA members, advising them of the limited window of opportunity to purchase prior military service, and the need to complete a CO-1088, entitled "Retirement Credit Purchase Form for Prior Miscellaneous Service - Tier IIA Members Only". Agencies will receive advance notification of the check enclosure date.
   

Very truly yours,

STATE EMPLOYEES RETIREMENT COMMISSION
NANCY WYMAN, SECRETARY EX OFFICIO

BY:

Steven Weinberger, Director
Retirement & Benefit Services Division