EMS/Fire Department Consolidation

1
EMS/Fire Department Consolidation

• Treatment of Pension and Service Under the
  Police/Fire, CSRS, and 401(a) Plans

2
Treatment of CSRS Service

• If Already Eligible to Retire or Within 31 Days
  of Eligibility (OPM Rule)
• Must Stay in CSRS Plan
• If Not Yet Eligible to Retire
• May Stay in CSRS Plan
• May Choose to Join Police/Fire Plan

3
If Already Eligible to Retire

• Will Continue to Make Contributions to the CSRS
  Plan
• Will Retire Under CSRS Plan Provisions
• Will be Eligible For Federal Post Retirement
  Health and Life Benefits

4
If Not Yet Eligible to Retire

• May Choose to Stay in CSRS Plan
• Treatment Described in Slide 3
• May Choose to Join Police/Fire Plan
• Will Begin Contributions to Police/Fire Plan
• Will Retire Under Police/Fire Plan
• Must Join Police/Fire Plan Before Becoming
  Eligible to Retire Under the CSRS Plan
• Cannot Rejoin the CSRS Plan at a Later Date
• Will Retain Federal Health and Life Benefits

5
Cost to Join the Police/Fire Plan Directly From
CSRS

• To Join the Police/Fire Plan, CSRS Participants
  Are Required to
• Contact OPM and Request a Refund of Their
  Contributions to the CSRS Plan.
• Deposit the CSRS Contributions into the
  Police/Fire Plan (Must Be Completed Before
  Retiring).
• Pay Interest From the Date of Participation in
  the CSRS Plan Ends to the Date the Refund is
  Deposited into the Police/Fire Plan.

6
Sample Calculation Direct Participation

• CSRS Contribution Balance as of
• July 1 75,000
• Assume Effective Date of Joining Police/Fire Plan
  is July 1
• Assume Funds are Deposited into Police/Fire Plan
  on September 1
• Amount due 75,850 (75,000 850 interest for
  2 months)

7
Cost to Join the Police/Fire Plan With Prior CSRS
Service

• EMS or Fire Employees Who Left the CSRS Plan
  Previously and Either Left Their Contributions in
  That Plan or Withdrew Them Would be Required to
  Deposit an Amount in the Police/Fire Plan That is
  Equal to
• The Amount of the Contributions, plus
• Interest Equal to the Average Rate of Return on
  Investment For the Police/Fire Retirement Fund
• From the First Day of the First Month After the
  End of the CSRS Service to the Last Day of the
  Month During Which the Deposit is Made
  5-704(e)(2)(a).

8
Sample Calculation Prior CSRS Service

• Prior Period of Employment 1982-1987
  Contributions 10,000
• Interest from 1987 to 2007 53,000

• - Scenario 1 Balance Left in CSRS Plan
• Amount Due From Member 53,000
• Amount Payable To Police/Fire
• Plan is 63,000 (10,000 53,000)

• - Scenario 2 Account Withdrawn in 1987
• Amount Due From Member 63,000

9
CSRS Plan Provisions

• Defined Benefit Plan
• Formula
• 1.5 x Average Pay x First Five Years of Service,
  Plus
• 1.75 x Average Pay x Years 6 10, Plus
• 2.0 x Average Pay x Years After 10.
• Average Pay Highest Consecutive 36 Months of
  Pay.

10
CSRS Plan Provisions (Continued)

• Member Contributions 7.5
• Vesting Service 5 Years
• Maximum Benefit 80 of Average Pay (Plus Unused
  Sick Leave)
• Normal Retirement Age
• 62, With 5 Years of Service
• 60, With 20 Years of Service
• 55, With 30 years of Service

11
CSRS Plan Provisions (Continued)

• Early Retirement
• Age 50, With 20 Years of Service
• Any Age, With 25 Years of Service
• Benefit Reduction if Under Age 55
• Annual Cost of Living Adjustments

12
Police/Fire Plan Provisions

• Defined Benefit Plan
• Formula (Tier 3)
• 2.5 x Average Pay x All Years of Creditable
  Service
• Average Pay Highest Consecutive 36 Months of
  Pay
• Member Contributions 8

13
Police/Fire Plan Provisions(Continued)

• Vesting Service 5 Years
• Maximum Benefit 80 of Final Salary (Plus Unused
  Sick Leave)
• Normal Retirement Age
• 25 Years of Service (at Any Age)
• Early Retirement No Such Provision
• Annual Cost of Living Adjustments (Capped at 3)

14
Sample CSRS Calculation

• Age 60
• 25 Years of Service
• 60,000 Average Salary
• 1.5 x 5 Years x 60,000 4,500
• 1.75 x 5 Years x 60,000 5,250
• 2.0 x 15 Years x 60,000 18,000
• Total Annual Benefit 27,750
• can retire at age 60 with 20 years of service
  (amount would be 21,750).

15
Sample Police/Fire Benefit

• Age 60
• 25 Years of Service
• 60,000 Average Salary
• 2.5 x 25 x 60,000 37,500

16
Treatment of 401(a) Service

• Participants Can Choose To
• Purchase Past Service, or
• Participate in the Police/Fire Plan From Date of
  Eligibility Forward Only
• EMS Service Will Be Recognized For Vesting and
  Retirement Eligibility Purposes, regardless of
  choice

17
If Purchasing Past Service

• Members May Choose to Purchase the Entire Service
  or a Portion of it.
• Entire Service
• The Amount Would Be the Actuarial Present Value
  of the Annuity From Date of Participation Under
  the 401(a) Plan.
• The Member Would Be Responsible For the Entire
  Amount (Which Would Be Offset By The Members
  401(a) Plan Balance).

18
Sample Calculation For Purchase of All Service

• Age 38, Service 11 Years
• Current Pay 50,000
• 401(a) Account Balance 30,000
• Actuarial Present Value of Service 170,000
  (service purchase amount)
• Member Owes 140,000 (170,000 - 30,000)

19
If Not Purchasing Past Service

• Members 401(a) Plan Balance Would Be Transferred
  Directly to the Police/Fire Plan.
• The Member Would Be Credited With Only the Amount
  of Benefit Service That the Existing 401(a) Plan
  Balance Would Buy.
• No Further Monies Would Be Required of the Member.

20
Samples of Account Balance/Service Conversion

• Age 38, Service 11 Years
• Current Pay 50,000
• 401(a) Account Balance 30,000
• Actuarial Present Value of Service 170,000
  (service purchase amount)
• Member Service Credit Equals 2 Years
• Account balance covers 2/11 of service purchase
• Full 11 Years Still Applies For Vesting and
  Retirement Eligibility

21
Treatment of Everyone Going Forward

• Contributions of 8 of Pay Would Be Required
  Under the Police/Fire Plan Beginning With the
  First Payday Following Date of Participation.
• District Contributions Would Cease For the 401(a)
  Plan as of the Last Day Covered Under That Plan.
• 401(a) Plan Balances Would Be Transferred
  Directly to the Police/Fire Plan By the Current
  Recordkeeper.

22
Treatment Going Forward (Continued)

• DCRB Will Maintain a Record of the 401(a) Balance
  Transferred to the Police/Fire Plan.
• Upon Termination or Retirement, a Vested Member
  May Choose to Receive An Annuity Under the
  Police/Fire Plan or a Refund of the 401(a) Plan
  Balance and Contributions Made to the Police/Fire
  Plan.

23
Treatment Going Forward (Continued)

• If a Vested Member Dies in Active Service and
  Without a Survivor
• The 401(a) Plan Balance Would Be Paid to His/Her
  Beneficiary, Along With Contributions Paid to the
  Police/Fire Plan.

24
Treatment Going Forward (Continued)

• If a Non-Vested Member Dies in Active Service
• The 401(a) Balance Would Be Forfeited (As
  Required Under the 401(a) Plan).
• Contributions to the Police/Fire Plan Would Be
  Paid to the Designated Beneficiary.
• Has Less Than 5 Years of Service.

25
Treatment Going Forward (Continued)

• If a Member Dies After Retirement
• Eligible Survivors Would Receive a Benefit Under
  the Police/Fire Plan.
• The Designated Beneficiary Would Be Paid the
  Amount By Which Employee Contributions Exceed
  Retirement Benefits Paid to the Member (if any).