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Human Resources - Retirement

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1. What is a “retirement allowance” and how is it calculated?

Your retirement allowance is based upon a formula which takes into consideration the length of your Town employment, your pensionable compensation, a rate of benefit determined by your collective bargaining agreement, and whether or not you have contributed fully to the Retirement System. This type of plan is called a “defined benefit pension plan.” The Town 401(k), 457 b and 403b plans are known as a “defined contribution savings plans.”

2. What is “includable” or “pensionable” compensation”?

For all employees, salary and shift differential are includable, overtime is not. Other compensation that is includable varies by union. Refer to your collective bargaining agreement for more information on what additional items may be included in your specific situation.

3. When can I retire?

Eligibility for a full service retirement occurs at the earlier of age 65 or the “Rule of 80.” The Rule of 80 means that the combination of your age and years of service equals 80 (example: 25 years of service plus 55 years of age = 80). Full service retirement may be taken by employees in Fire upon completing 20 years of creditable service and Police upon completing either 20 or 25 years of creditable service depending upon date of hire, regardless of age.

Eligibility for early service retirement occurs at age 60, provided that the member is not eligible for a full service retirement. Management and Confidential employees may take early retirement at age 55 after completing 5 years of service. If you elect this option, your monthly retirement allowance will be reduced to reflect the additional years that you are expected to receive payments.

4. What is the maximum amount I can receive as a retirement allowance?

All employees, with the exception of Police and Fire, are eligible to receive a retirement allowance not to exceed 66.667% of their highest pensionable compensation paid over 26 consecutive biweekly pay periods. Police Officers and Firefighters, upon completing 26 years and 8 months of sworn, full-time service are eligible for a maximum benefit equal to 75% of their highest pensionable compensation paid over 26 consecutive biweekly pay periods.

5. What is vesting and how long does it take to vest my pension benefit?

Vesting is the minimum number of years of full-time Town service required to be eligible to receive a future pension benefit. Vesting schedules vary by union. Refer to your collective bargaining agreement for your specific vesting schedule.

6. Do I receive service credit for active military service?

Employees may apply once for credit for an honorable discharge from active military service up to a maximum of 4 years. The cost for one year of military service credit is the product of your current pensionable compensation from the previous 26 pay periods and your pension contribution rate as per your collective bargaining agreement at the time you purchase this credit.

7. Does military service credit count toward my vesting?

Credit for military service is not considered in determining when you vest in the Plan. Military service credit only increases the number of years of service used in the calculation of your retirement allowance.

8. Once I am vested, if I leave Town employment before I retire, am I still eligible to receive my retirement allowance when I reach retirement age or the Rule of 80?

If you leave Town employment after vesting, but before you are eligible to retire, you become a “vested terminated” employee. At the time of separation you may either make a one time election to withdraw your contributions, or leave them on deposit with the Retirement System. If you leave your contributions in the Plan, they will continue to earn interest until you are eligible for retirement. You may not withdraw your contributions until you are eligible to retire. To begin receiving your retirement allowance, you should contact the Retirement Benefits Administrator no more than 90 nor fewer than 30 days before you become eligible to obtain the forms required to apply for your retirement benefit.

9. Are contributions to the Plan mandatory?

Whether your contribution is mandatory is determined by your collective bargaining agreement. In order to receive a full retirement allowance, you must contribute to the Retirement System at a percentage of pay that is determined by your collective bargaining agreement.

If you are not contributing, your retirement allowance will be reduced to reflect the annuity value of the contributions you did not make during your employment plus the interest not earned on those contributions. This is referred to as your contribution deficiency.

10. Can I make up my contribution deficiency?

At retirement (only), employees may repay their deficiency by transferring funds from the Savings Plan of the Town Greenwich 401(k), 457(b) or 403(b) plans into the Retirement System. At retirement employees may also elect to transfer or withdraw funds from the Retirement System in return for a reduced monthly retirement allowance. Funds withdrawn may be taxed as ordinary income and early withdrawal penalties may apply. Funds transferred to another qualified plan are not subject to current taxation. You should consult your financial or tax professional for advice, as the Retirement Department does not provide these services.

11. Are my contributions made on a before-tax or after-tax basis?

All contributions to the Plan made on or after July 1, 2002 are on a pre-tax basis.

12. What rate of interest do my contributions earn?

The interest rate is set annually by the Retirement Board every May and currently is equal to the rate on the 5 year Treasury Note as of the last business day in April. This rate is applied to all account balances on July 1 of each year and used for all interest calculations through June 30th of the following year.

13. What options are available to me at the time of retirement?

At retirement, you will have the opportunity to repay any contribution deficiency by transferring funds from your 401(k), 457(b) or 403(b) plan, or to withdraw your contributions. The decision you make will impact the amount of your monthly retirement allowance. You will also be asked to select the form in which your benefits will be paid. Current options are:

• Option 1 - Refund of contributions: A portion of your contributions (plus interest) is returned to you as part of your monthly retirement allowance. Any funds not already distributed at the time of your death will be refunded to your beneficiary or estate. This option yields the largest monthly benefit in most instances, as all monthly payments cease upon your death.
• Option 2 - 100% Joint and Survivor: At your death, your beneficiary will continue to receive 100% of your retirement allowance until their death. This option yields a lower monthly benefit in most instances, as payment of 100% of your retirement allowance continues throughout the lifetime of your beneficiary.
• Option 3 - 50% Joint and Survivor: At your death, your beneficiary will continue to receive 50% of your retirement allowance until their death. This option yields a lower benefit than Option 1, but a higher benefit than Option 2, as payment of only 50% of your retirement allowance continues throughout the lifetime of your beneficiary.

Members of Police and Fire have one additional option:

• Option 0 - Widow’s Benefit: At your death, your beneficiary will continue to receive 50% of your retirement allowance until their death or remarriage, whichever first occurs. Benefits for surviving minor children are also provided, if no spouse survives you. For members of the Police and Fire, this option usually yields the largest monthly benefit, but also provides the most restrictive survivor benefit, as payments cease at remarriage.

Note: If you elect Options 0, 2 or 3, your monthly retirement allowance will be reduced based on your age and that of your beneficiary at the time of retirement.

14. What happens to my contributions if I die or leave Town employment before I am vested?

Employees who leave Town employment prior to becoming vested should request to have their contributions plus interest refunded. The Retirement Board will not pay interest on your contribution after 60 days from your last date of employment. As a Trust, the Retirement Board does not have the authority to invest funds for the benefit of non-members. If the refund is due to death of the employee, contributions plus interest will be refunded to their beneficiary.

15. What happens to my contributions if I die after I’m vested, but before I retire?

Beneficiaries of vested employees who die prior to retirement may be eligible to receive a pension equal to the amount the employee would have received had they retired on the day on which they died and had elected Option 2, 100% Joint and Survivor. Please check your collective bargaining agreement to see if this provision applies in your personal situation. The beneficiary must apply for a Retirement Allowance.

16. What happens to my contributions at the time of my death, after I retire?

Whether your beneficiary receives a retirement allowance or possibly a refund of contributions at the time of your death depends on the election you make at the time you retire. If you elect Option 1, a refund may be payable at your death. If you elect any of the other options, no refund will be made.

17. Who can I name as my beneficiary?

You can name anyone as your beneficiary; however, if you are married, federal ERISA regulations provide that you cannot leave a spouse with a survivor benefit that is less than a 50% retirement allowance for their lifetime, unless that spouse waives their rights to this benefit. Therefore, if you are married and wish to elect Option 1, Refund of Contributions, or Option 0, a notarized spousal waiver form is required.

18. Does my choice of beneficiary impact my retirement allowance?

Yes. Selection of Option 1, Refund of Contributions, (or Option 0 in the case of Police or Fire) will yield the highest retirement allowance. Selection of Options 2 or 3, each of which provide for payments to continue after your death, yields a lower monthly retirement allowance during your lifetime. The exact discount is determined by your age and the age of your beneficiary at the time of your retirement.

19. Can I change my beneficiary at a later date?

Prior to retirement you can change your beneficiary at any time by submitting a Change of Beneficiary form. You may not change your beneficiary once your retirement has been approved by the Retirement Board.

20. Can I borrow against my pension contributions?

No. Under federal income tax regulations, borrowing against contributions made to a defined benefit pension is prohibited.

21. Can I roll over contributions that I made to another plan into the Defined Benefit Plan?

No. The plan document for the Town defined benefit pension plan does not permit rollovers from other qualified plans. You may be able to roll over your contributions from another plan into the Town 401(k) Plan by calling Diversified Investments at 800-755-5801.

22. If I work as a full-time employee for the Town, leave, and return to full-time employment with the Town at a later date, do I receive credit for my first period of service?

You may apply for restoration of prior service credit if you meet several conditions. First, your break in service must not be greater than the length of your prior creditable service. Additionally, within the first year following rehire, any contributions plus interest that were withdrawn from the Retirement System must be restored to the Retirement System together with any interest payable to the date of rehire. If these conditions are met, you can request to have service credit restored after six months of continuous service during your subsequent period of employment. Service credit may not be awarded for any period during which you were not a full-time employee of the Town.

23. How do I obtain an estimate of my retirement allowance?

You may obtain an estimate of your retirement allowance on Diversified Investments website. In addition to a pension statement you also have the use of a pension calculator to estimate your retirement allowance at a future date.

24. I have a date set for when I want to retire. How do I initiate the retirement process?

You should make an appointment with the Retirement Benefits Administrator not more than 90 days nor less than 30 days from the date you wish to retire. Retirements take place on the first day of the month following approval by the Retirement Board at the monthly Retirement Board meeting.