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Types of Benefits and Calculations

Regular Retirement Benefit and Calculation

Early Retirement Benefit and Calculation

Disability Benefit and Calculation

Active Member Death Benefit and Calculation

Regular Retirement Benefit

In order to receive a regular retirement (lifetime monthly) benefit, you must meet the following qualification based on the plan appropriate for you:

Plan B (Members retiring on or after June 30, 1999 and hired prior to January 1, 2014)

1. You must be vested (contributed to KCPSRS for at least five (5) years).
2. You must be 60 years old; or you must have at least 75 credits, with each year of creditable service (prorated for fractional years) equal to one credit, and each year of age (prorated for fractional years) equal to one credit.
3. You must have terminated employment with any KCPSRS participating employer.

Plan C (Members hired after January 1, 2014)

1. You must be vested (contributed to KCPSRS for at least five (5) years).
2. You must be 62 years old; or you must have at least 80 credits, with each year of creditable service (prorated for fractional years) equal to one credit, and each year of age (prorated for fractional years) equal to one credit.
3. You must have terminated employment with any KCPSRS participating employer.

Payment Options

If you are eligible for a regular retirement benefit, you may choose one of the four payment options (Basic, Option 1, Option 2, or Option 3).

Basic Benefit

The basic benefit consists of the retirement benefit payable based on the regular retirement benefit calculation and, if applicable, the early retirement reduction factor.  This benefit is payable for as long as you live.  If you should die before receiving retirement payments totaling the amount of your contributions plus interest to the plan, then your beneficiary will receive a lump sum payment of the remainder of your contributions plus interest.

Option 1 (Survivor 100%)

Option 1 provides a reduced benefit to you for the rest of your life and, upon your death, the same benefit for your designated survivor for the balance of his / her life.  If your survivor dies before you, your retirement benefit will be increased to the Basic Benefit amount.  After the death of both you and your survivor, no further benefits will be paid.

Option 2 (Survivor 50%)

Option 2 provides a reduced benefit to you for the rest of your life and, upon your death, a benefit for your designated survivor that is 50% of your monthly benefit.  If your survivor dies before you, your monthly benefit is increased at that time to the Basic Benefit amount.  After the death of you and your survivor no further benefits will be paid.

Option 3 (Life Only)

Option 3 pays a slightly higher benefit than the Basic Benefit.  However, should you die before receiving retirement payments totaling the amount of your contributions plus interest, there is no payment to your beneficiary.

IMPORTANT: If you elect Option 1 or 2, your survivor selection is irrevocable for life once you receive your first retirement check.

Regular Retirement Benefit Calculations

Definitions

Average Final Compensation (AFC): The highest average annual compensation received based on contributions paid, for any four consecutive years of contributable service.

Years of Creditable Service (YCS): The amount of time a regular employee is a member of the retirement system and makes contributions to the system and prorated for partial years worked.

The regular retirement benefit calculation uses your Average Final Compensation (AFC) times a multiplier specific to your plan times the Years of Creditable Service (YCS) subject to a maximum limit.  Dividing the annual retirement benefit by 12 gives you the monthly benefit amount.

Plan B: (Members retiring on or after June 30, 1999 and hired prior to January 1, 2014)

(AFC x 2% x YCS)/12 = Monthly benefit

Plan C: (Members hired on or after January 1, 2014)

(AFC x 1.75% x YCS)/12 = Monthly benefit

EXAMPLE: Pat Smith, hired prior to January 1, 2014, retires from the School District on June 1, 2016 after working 15.5 years.  Pat’s highest average annual compensation for four consecutive years is $22,500.  If he were 60 years old the calculation of Pat’s monthly benefit would be: ($22,500 x .02 x 15.5)/12 = $581.25 monthly benefit

Maximum Retirement Allowance

The maximum retirement benefit is 60% of Average Final Compensation.  Therefore, even if you have more than 30 years of contributable service for Plan B or 34.29 years of contributable service for Plan C, your benefit will not exceed 60% of your AFC.

Early Retirement Benefit

You can choose to receive an early retirement (reduced amount) once you become vested and attain the age of 55.  The monthly benefit will be reduced based on the number of months you lack meeting the full retirement requirement of being at least age 60 under Plan B and age 62 under Plan C.

Early Retirement Benefit Calculations

The early retirement benefit calculation reduces the regular retirement benefit based on an actuarial factor for the number of months prior to age sixty (normal retirement age) that a member elects to receive a benefit.

Example: Pat is 57 years and 7 months old when he decides to retire.  He is a plan B member.  His monthly benefit of $581.25 is reduced to $467.95 because he is taking an early retirement benefit.  ($581.25 x the actuarial reduction rate for his age, 0.80507 = $467.95)

Disability Benefit

You may be eligible to receive a disability retirement benefit if the following requirements are met:

1. You are vested.
2. You are unable to perform your employment duties.
3. This incapacity is likely to be permanent.
4. The disability is certified by the Retirement System’s Medical Board and approved by the Board of Trustees.
5. You will be subject to periodic re-evaluation of your disability.
6. You may be subject to annual income restrictions.
7. The disability commenced while you were an active member (employed with a covered employer).

Annual application for benefits may be made after you cease to be an active member, provided the disability commenced while you were an active member and provided that the application is made no later than six months after you ceased to be an employee of one of the Retirement System’s employers covered under this plan.

Disability Benefit Calculations

Your disability benefit is calculated in the same way that your regular retirement is determined; however, you are deemed to have reached retirement age at the time you qualify for disability benefits.

The minimum disability benefit is either, 25% of your average final compensation, or a benefit calculated assuming you worked to age 60—whichever is smaller.

Your disability benefit will be subject to adjustment if you resume any kind of work.  You should call KCPSRS if that situation arises.

Active Member Death Benefit

If you die before retirement benefits begin, the member’s contribution and interest will be paid to the member’s primary beneficiary.  Your primary beneficiary for the plan is a surviving spouse, a dependent child under age 19, or a dependent parent, the primary beneficiary may elect to receive a monthly retirement benefit if:

1. You were an active Member of the Plan at the time of your death;
2. You were an inactive vested Member and you met the age and service requirements for either a regular or an early retirement benefit.

In any other circumstance, your beneficiary (or beneficiaries) is (are) entitled to receive your contribution amount and any interest accumulated as a lump sum payout at your death.

KCPSRS is required by law to pay the beneficiary listed on your membership record.  Always notify the Retirement Office when you have a change that requires a new beneficiary designation.

Active Member Death Benefit Calculations

The death benefit for a qualified beneficiary who elects a monthly benefit is calculated using the regular retirement benefit calculation reduced to the 100% survivor option payment amount, and your date of death as the date of retirement.  Your age, at the time of your death, and the age of your beneficiary will affect the amount of the Death Benefit.

The years of creditable service will be the greater of ten or the member’s actual years of service.

Your primary beneficiary, if qualified, may elect to receive the 100% survivor benefit known as “Option 1” (see Types of Benefits – Regular Retirement Benefit).

If your primary beneficiary is a dependent child the monthly benefit payment will terminate when the child attains age nineteen.

Please contact KCSPRS with questions.

kcpsrs_admin August 31st, 2016

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