What is my Retirement Plan?
Your Retirement Plan is a Hybrid and has two components, a pension component and an annuity component. The pension, also called a Defined Benefit Plan, requires mandatory employee contributions, which are deductions withheld from your paycheck every pay period. The pension is a retirement plan funded by employer contributions, employee contributions and earnings from the assets of the System. The annuity component is voluntary, where employees can elect to participate. It’s called the Annuity Savings Fund. The annuity permits you to make voluntary contributions, which, while employed earns between 0% and 5.25% annually. You may contribute between 3%, 5% or 7% of your pay. You can also change voluntary contributions throughout the year. The voluntary contributions you make are yours to withdraw once you meet plan criteria.
If you hired before July 1, 2014 you may have two retirement plans. The Legacy Plan which has its own rules and the Hybrid Plan which is applicable to all those that have hired on or after July 1, 2014.
How much are my mandatory contributions?
Your mandatory contribution is currently 4% of your base compensation. The 4% is deducted on a pre-tax basis. This rate can change depending on the funding of the plan. Please see the Plan of Adjustment (POA) Combined Plan Document for more details.
Can I opt out of the Hybrid pension plan?
No.
May I take out my Hybrid pension as a lump sum amount while working?
No.
When can I retire?
Component II (Legacy)
You may elect a service retirement if you have at least 30 years of credited service; or, if hired after January 1, 1996, 30 years of service and 55 years of age; or, if you are age 60 or older and have at least 10 years of credited service; or, if you are age 65 or older and have at least 8 years of credited service. An actuarially reduced service retirement benefit may be elected at any age with 25 or more years of service.
Years of Service
After Jan. 1, 1996
Age 65 or older
Accumulated Service Credit
30 years and age 55
At least 10 years
At least 8 years
Component I (Hybrid)
Members may retire at age 62 with at least 10 years of service or refer to the transition chart, if applicable.
Age as of July 1, 2014
Normal Retirement Age
60 years and 0 months
60 years and 0 months
60 years and 3 months
60 years and 6 months
60 years and 9 months
61 years and 0 months
61 years and 3 months
61 years and 6 months
61 years and 9 months
Can I elect a reduced early pension benefit?
Legacy
A reduced early pension is an election to receive your pension before you are eligible for a service retirement. You must have at least 25 years of credited service to receive a reduced early pension benefit. You may elect a reduced early pension benefit in lieu of a deferred benefit. The value of the reduced early pension benefit is the actuarial equivalent of a vested pension. You have 90 days after your separation from the City to elect the reduced early pension benefit.
Hybrid
You must have at least 30 years of credited service and have attained age 55, and have not attained your Normal Retirement Date, to receive a reduced early pension benefit.
May I take out my Hybrid Pension as a lump sum amount?
Upon retirement, GRS employees may elect to receive a refund of their contributions in lieu of receiving a Hybrid Pension.
If I am a former employee returning to work for the City, am I vested in the new hybrid pension plan?
A service check is needed to determine if you’re vested in both plans. Please contact the Retirement System’s Office to request a service check.
How do I apply for retirement?
To apply for retirement, follow these steps:
If you are granted a leave of absence to enter the military while you are employed by the City, you will be given service time credit as if your service was uninterrupted, provided you return to City service after completing military duty within the period of time prescribed by law. You will not make contributions while you are in military service, but interest will continue to be credited to your accumulated contributions. Mandatory contributions will have to be paid for the time missed upon the return of the employee.
If you were granted pre-employment military service credit in the Legacy Plan it cannot be used to qualify for earlier retirement. It can only be used to increase the amount of pension benefit you will receive upon retirement.
How long is the process to receive Military Service Credit?
It takes 4-6 weeks to complete the process.
If you are granted a leave of absence to enter the military while you are employed by the City, you will be given service time credit as if your service was uninterrupted, provided you return to City service after completing military duty within the period of time prescribed by law. You will not make contributions while you are in military service, but interest will continue to be credited to your accumulated contributions. Mandatory contributions will have to be paid for the time missed upon the return of the employee.
If you were granted pre-employment military service credit in the Legacy Plan it cannot be used to qualify for earlier retirement. It can only be used to increase the amount of pension benefit you will receive upon retirement.
How long is the process to receive Military Service Credit?
It takes 4-6 weeks to complete the process.
If I resign before my retirement age, will I still receive a retirement allowance?
You may be eligible to receive a vested retirement allowance if you have at least 10 years of credited service. You may collect at age 62.
When is a pension vested?
A pension benefit is vested when a member has at least ten 10 years of credited service. A member shall be credited with a year of vesting service for each plan year commencing on or after July 1, 2014 during which the member performs 1,000 or more hours of service for the employer.
If I’m a former employee and vested in the legacy pension plan can I draw an actuarial reduced benefit from the hybrid plan instead of waiting until age 62?
You can receive a vested retirement with 30 years of service and age 55 in Hybrid Plan.
Can I name someone other than my spouse as my beneficiary?
You may designate any person as your beneficiary.
What if I die before my retirement eligibility, does my beneficiary receive a pension?
Legacy and Hybrid
If you die before you are eligible to begin drawing your Vested Retirement Allowance, your spouse is not eligible for any allowance/benefits. They would, however, receive any balance in your Annuity Savings Fund plus interest earned in a lump sum upon request.
Accidental Death Benefit; Performance of Duty
(1) If a Member is killed in the performance of duty in the service of the Employer, or dies as the result of illness contracted or injuries received while in the performance of duty in the service of the Employer, and such death, illness or injury resulting in death, is found by the Board to have resulted from the actual performance of duty in the service of the Employer, the Member’s surviving Spouse shall be entitled to a monthly annuity benefit equal to the Member’s Retirement Allowance at the time of his death, unreduced for early payment. Such benefit shall be payable until the surviving Spouse’s death.
(2) The minimum annual Retirement Allowance payable to a surviving Spouse with respect to (1) above shall be equal to ten percent (10%) of the Member’s Average Final Compensation determined as of the date of the Member’s death.
Death Benefits for Surviving Spouses Generally
If any Member dies while in the employ of the Employer (other than in the performance of duty) after the date such Member has earned ten or more years of Credited Service, the Member’s surviving Spouse shall receive a Retirement Allowance. The Retirement Allowance payable to the Spouse shall be computed in the same manner in all respects as if said Member had (i) retired effective the day preceding the Member’s death, notwithstanding that the Member had not attained his or her Normal Retirement Date, (ii) elected a Joint and One Hundred Percent Survivor Allowance as described in Section 8.1, and (iii) nominated the surviving Spouse as Beneficiary.
Refund of Accumulated Mandatory Contributions Upon Death of Member
If a Member dies while employed by the City or following termination of employment and the Member is not eligible for a benefit the Member’s Accumulated Mandatory Employee Contributions to the Retirement System at the time of death shall be paid to the Beneficiary nominated in a written designation duly executed by the Member and filed with the Board. In the event there is no such designated Beneficiary surviving, the Member’s Accumulated Mandatory Employee Contributions shall be paid to the Member’s estate. If a Member who dies without a legal will has not nominated a Beneficiary, the Member’s Accumulated Mandatory Employee Contributions at the time of death may be used to pay burial expenses if the Member leaves no other estate sufficient for such purpose. Such expenses shall not exceed a reasonable amount as determined by the Board.
Benefits Offset by Compensation Benefits; Subrogation
(1) Any amounts which may be paid or payable to a Beneficiary on account of a Member’s death under the provisions of any Workers’ Compensation, pension, or similar law, except federal Social Security old-age and survivors’ benefits, shall be an offset against any amounts payable from funds of the Retirement System on account of the Member’s death. If the present value of the benefits payable under said Workers’ Compensation, pension, or similar law, is less than the Pension Reserve for the Retirement Allowance payable by the Retirement System, the present value of the said Workers’ Compensation, pension, or similar legal benefit shall be deducted from the amounts payable by the Retirement System, and such amounts as may be provided by the Retirement System, so reduced, shall be payable as provided in this Combined Plan Document.
(2) In the event a person becomes entitled to a pension payable by the Retirement System because of an accident or injury caused by the act of a third party, the Retirement System shall be subrogated to the rights of said person against such third party to the extent of the benefit which the Retirement System pays or becomes liable to pay.
Who should my beneficiary contact in the event of my passing
Contact the Retirement System to report the death of an employee.
How long does it take for the death benefit claim to be processed?
It takes approximately 8 to 10 weeks to process death claim benefits.
Suppose my spouse and I divorce before or after I retire, are my benefits affected?
If your accrued retirement benefits are included as a marital asset in a divorce property settlement, the courts can allocate the marital portion of your pension and/or annuity among the involved parties under an Eligible Domestic Relations Order (EDRO). You should consult with your attorney concerning Public Act 46 of 1991.
When will I be eligible to withdraw from my Legacy/Hybrid Annuity?
Legacy
You may withdraw from your Component II (Legacy) Annuity Plan if:
• You are separated (retirement/resignation/termination/layoff) from service with the City.
You are allowed a one-time withdrawal if:
• You are an employee receiving a duty/non-duty disability benefit
• You are converting from a duty/non-duty disability to a service retirement.
• You are an active employee with at least 25 years of service
Hybrid
You may only withdraw from your Component I (Hybrid) Annuity Plan if you are separated from service (retirement/resignation/termination/layoff) with the City.
How can I start/stop my annuity contributions?
In order to start or stop your voluntary contributions, you must contact the City Payroll Office at (313) 628-2550 and complete a Voluntary Contribution Election Form.
How much can I borrow from my annuity plan?
Legacy
The minimum amount you can borrow from the Annuity Loan Program is $1,000.00. The maximum amount you may obtain is the lesser of (i) one-half (50%) of your current annuity balance or (ii) $10,000.00 reduced by the outstanding balance of any loans from the annuity account.
Hybrid
The Component I (Hybrid) Annuity Loan Program is not yet available.
What happens to my annuity loan if I resign/retire from the City?
If you resign or retire from the City and you have an outstanding annuity loan, First Independence Bank will send you an “Employment Separation Letter” where you will be given the option to:
(a) default on your loans (in which case you will be issued a 1099)
(b) pay your loan balance in full.
If I experience a hardship (emergency), can I withdraw from my annuity early?
Hardship withdrawals from the annuity plan are not permitted
How is the interest rate on my Defined Contribution Plan (Annuity) monies determined?
Earnings credited to a member’s voluntary annuity contributions shall be no less than zero and no greater than the lesser of (i) 5.25% or (ii) the actual investment return net of expenses of the Retirement Systems’ invested reserves for the second plan year immediately preceding the plan year in which the annual return is credited.
How can I obtain my annuity balance?
Annual annuity statements are mailed at the end of each fiscal year, June 30. However, you can request a current statement of your annuity balance at any time. You can request a statement in person, over the phone or via written request.
Can I leave my Defined Contribution Plan (Annuity) monies in my Retirement System Account after I retire?
Upon retirement you may elect to “annuitize” your entire or a portion of your annuity balance. If you choose to annuitize, you will receive a monthly annuity benefit (included in your pension check) based on your contributions, your chosen pension option, and your age. You may refer to your Benefit Estimate for the monthly annuity rate.
What if I become totally or permanently disabled?
The Retirement System no longer processes disability retirements for General City Employees. Please contact your Human Resources Representative for available options.
How much income can I earn while on disability which was obtained prior to July 1, 2014?
As an employee on duty/non-duty disability, you are able to earn up to your active salary, less what you receive in disability payments each calendar year.
| Annual Salary (while active) | $20,000.00 Gross |
| Disability Benefit | $ -5,000.00 Gross |
| Allowable Outside Earnings | $15,000.00 Gross |
If you exceed the allowable amount, your disability allowance will be reduced to recover the overpayment. The Board is required to adjust future pension payments to recoup all overpayments.
How are retirement systems funds invested?
The Board of Trustees of the Retirement System is responsible for the proper operation of the Retirement System. The investments of all Retirement System’s assets (which consist of the assets of the Defined Benefit and Annuity Savings Fund) are made by the Board of Trustees as authorized by State Law. It is Board policy to prudently invest pension funds so that the highest return is attained among the safest investments. To assist in carrying out these responsibilities, the Board utilizes the services of Investment Advisors who make recommendations to the Board of Trustees regarding investments in accordance with the authority and limitations provided by law.
As a result of the Plan of Adjustment (POA), the Investment Committee is authorized to assist in carrying out these responsibilities. The Board and Investment Committee directs the Chief Investment Officer and Investment Consultant to make recommendations to the Board of Trustees and the Investment Committee regarding investments in accordance with the authority and limitations provided by law.
What are the equate retirement options and how does it affect me?
If you retire before age 65, you may elect the Social Security Coordination Option. Under this option, you would be paid an increased allowance until you become eligible to receive Social Security Benefits at either age 62 or 65, and a reduced retirement thereafter.
To Illustrate:You are age 60 with a projected retirement allowance of $1,000 per month and an estimated Social Security Benefit at age 62 of $680 per month. Your monthly retirement income until age 62 would be $1,000. When you begin to receive a Social Security Benefit at age 62, your estimated monthly income would increase to $1,680 ($1,000 plus $680). You could level the amount of your monthly income by electing the Social Security Coordination Option at the time you retire. Under this option, your retirement allowance until age 62 could be increased to $1,550. At age 62, your estimated retirement allowance would be decreased to $870. The sum of your reduced estimated retirement allowance ($870) and your estimated Social Security Benefit ($680) could be $1,550 which is the same estimated amount you were receiving before age 62, so your monthly income should remain level.
Can I protect myself in case my beneficiary dies before me?
You can provide lifetime protection for your designated option beneficiary by electing an alternative retirement allowance, with or without the Pop-Up Option, at the time you retire. You cannot change your election or your option beneficiary after you’ve cashed your first pension check.
What is the "Pop-Up" Option?
The "Pop-Up" Option is a retirement option that you may elect which allows for your retirement to be changed in the event your beneficiary predeceases you. The additional cost associated with this option is borne by the retiree and his/her beneficiary. The cost is an actuarial value that is determined by the age of the retiree and their designated beneficiary at the time of application.
Joint and 100% Survivor Allowance with Pop-up
If you select this option, you would receive an actuarially reduced retirement allowance for as long as you live, with the added provision that upon your death the option beneficiary designated by you, at the time you elect the Pop-Up, would begin to receive 100% of your actuarially reduced retirement allowance for the remainder of their life; however, if your beneficiary predeceases you, your benefit would automatically change to the straight life amount.
To Illustrate:You are age 60 with a straight life retirement allowance of $1,000 a month. Your designated option beneficiary is also age 60. Your actuarially reduced retirement allowance would be $820.40 per month with Pop-Up, payable as long as your designated option beneficiary survives. If your beneficiary predeceases you, your benefit would automatically change to the straight life amount of $1,000 a month.
Joint and 75% survivor allowance with pop-up:
If you select this option, you would receive an actuarially reduced retirement allowance for as long as you live, with the added provision that upon your death the option beneficiary designated by you, at the time you elect Pop-Up, would begin to receive 75% of your actuarially reduced retirement allowance for the remainder of their life; however, if your beneficiary predeceases you, your benefit would automatically change to the straight life amount.
To Illustrate: You are age 60 with a straight life retirement allowance of $1,000 a month. Your designated option beneficiary is also age 60. Your actuarially reduced retirement allowance would be $858.97 per month with Pop-Up, payable as long as your designated option beneficiary survives. If your beneficiary predeceases you, your benefit would automatically change to the straight life amount of $1,000 a month.
Joint and 50% survivor allowance with pop-up:
If you select this option, you would receive an actuarially reduced retirement allowance for as long as you live, with the added provision that upon your death the option beneficiary designated by you, at the time you elect Pop-Up, would begin to receive 50% of your actuarially reduced retirement allowance for the remainder of their life; however, if your beneficiary predeceases you, your benefit would automatically change to the straight life amount.
To Illustrate: You are age 60 with a straight life retirement allowance of $1,000 a month. Your designated option beneficiary is also age 60. Your actuarially reduced retirement allowance would be $901.34 per month with Pop-Up, payable as long as your designated option beneficiary survives. If your beneficiary predeceases you, your benefit would automatically change to the straight life amount of $1,000 a month.
Joint and 25% survivor allowance with pop-up:
If you select this option, you would receive an actuarially reduced retirement allowance for as long as you live, with the added provision that upon your death the option beneficiary designated by you, at the time you elect Pop-Up, would begin to receive 25% of your actuarially reduced retirement allowance for the remainder of their life; however, if your beneficiary predeceases you, your benefit would automatically change to the straight life amount.
To Illustrate: You are age 60 with a straight life retirement allowance of $1,000 a month. Your designated option beneficiary is also age 60. Your actuarially reduced retirement allowance would be $948.11 per month with Pop-Up, payable as long as your designated option beneficiary survives. If your beneficiary predeceases you, your benefit would automatically change to the straight life amount of $1,000 a month.
See the chart below for examples of actuarially reduced retirement allowances with the Pop-Up Option, based on several combinations of age.
When will I receive my first pension check?