1. Covered Employer Training Program Module Five The Retirement Process

2. Retirement Eligibility Requirements (Class Two Membership prior to July 1, 2012) A member must have at least five years of earned service to consider retirement. South Carolina Retirement System (SCRS) : Normal retirement (unreduced benefits) eligibility – Age 65; or – 28 years of service credit Early retirement (reduced benefits) eligibility – age 60; or – Age 55 or older with 25 years or more of service credit Police Officers Retirement System (PORS): 25 years of service credit regardless of age, OR Age 55 or older

3. Retirement Eligibility Requirements (Class Three Membership Effective July 1, 2012) A member must have at least eight years of earned service to consider retirement. South Carolina Retirement System (SCRS) Rule of 90. Age and years of service must add up to 90 with eight years of earned service. A member who is 56 years old and has at least 34 years of service, eight years of which must be earned, would be eligible for normal retirement (56 + 34 = 90) Age 60 or older on the date of retirement with eight years of earned service (5 percent reduction for each year member retires before age 65). Police Officers Retirement System (PORS) 27 years of service credit regardless of age, OR Age 55 or older

4. Retirement Payment Options Option A: retiree only Option B: 100%-100% joint retiree-survivor monthly annuity plan (non-spousal age restrictions apply) Option C: 100%-50% joint retiree-survivor monthly annuity plan

5. Changing Payment Option after Retirement If all beneficiaries predecease the retiree, the annuity reverts to Option A effective on the date the last beneficiary died. If the retiree has a change in marital status, he may select a new beneficiary(s) under Option B or C and/or a new payment plan within one year of the change in marital status. The change is effective the first of the month in which the form is received.

6. SCRS Retirement Application Member submits: – Application for Service Retirement Benefits (SCRS) (Form 6101S)Form 6101S – Driver’s license or state issued identification (ID) card – Copy of birth certificate and beneficiary’s birth certificate if choosing a survivor option. – Pension Withholding Certificate for Monthly Annuity Payments (Form 7202) and Electronic Funds Transfer Authorization for Annuities (Form 7204)Form 7202Form 7204 Employer submits: – Employer Certification of Last Day Paid through EES

7. PORS Retirement Application Member submits: – Application for Service Retirement Benefits (PORS) (Form 6101P)Form 6101P – Driver’s license or state issued ID card – Copy of birth certificate and beneficiary’s birth certificate if choosing a survivor option. – Pension Withholding Certificate for Monthly Annuity Payments (Form 7202) and Electronic Funds Transfer Authorization for Annuities (Form 7204)Form 7202Form 7204 Employer submits: – Employer Certification of Last Day Paid through EES

8. Retiree Beneficiaries Retiree beneficiaries are designated on the retirement application. retirement application – Section II Recipient for monthly survivor annuity or refund of contributions – Section III Recipient for incidental death benefit

9. Retiree Trust Beneficiaries If member wants to designate a trust as beneficiary: – Notice the box in Section II – See example in appendix of how to complete the retirement application properly for a trust beneficiary. – Member must also submit a Certification of Trust (Form 1113) with the application.Form 1113

10. Service Retirement Process Member must be within six months of the date of retirement to submit retirement application. All service purchases must be paid in full prior to retirement date. Date of retirement cannot be more than 90 days retroactive to date PEBA receives retirement application. Retirement benefits are not automatic; members must submit a retirement application.

11. What is the Teacher and Employee Retention Incentive (TERI) Program? Any active Class Two SCRS member eligible to retire may participate in the TERI program (this program is not available to members of PORS). A member retires but continues to work for up to 60 more months. Monthly annuity payments are held in escrow without interest and are distributed at the end of the member’s TERI period. Participants must terminate employment at end of their TERI program. See TERI Program Reminders (Form 6376).Form 6376 TERI Program will close effective June 30, 2018.

12. What is the TERI Program? (continued) After termination, the retiree receives his accumulated TERI balance and begins receiving his monthly annuity payments. Retiree does not receive additional service credit during his TERI participation period. Participants must remit contributions as a working retiree. Average final compensation (AFC) recalculated at the end of TERI to include payment for unused annual leave paid at termination.

13. Ending TERI Participation If an employee will be ending TERI participation before his original scheduled date, simply call or e-mail PEBA to inform us of the early termination date. You or the employee can contact us with this information. PEBA will then mail to the employee the TERI Payout Election (Form 7500), Pension Withholding Certificate for Monthly Annuity Payments (Form 7202) and Electronic Funds Transfer Authorization for Annuities (Form 7204).Form 7500Form 7202Form 7204

14. Ending TERI Participation (continued) You must submit the TERI Termination Certification through EES, which is used to receive annual leave information and final TERI payroll information.

15. Disability Retirement Benefit (Prior to January 1, 2014) Must have at least five years (Class Two) or eight years (Class Three) of earned service if the injury is not job-related. You may apply for disability retirement if you become physically or mentally incapable of performing the regular duties of your job and your disability is likely to be permanent. PEBA must receive your application for disability retirement within 90 days of your date of termination from covered employment. Approval does not guarantee payment for life. Continuing disability reviews may be scheduled periodically. 15

16. Disability Retirement (continued ) If a member has already met service retirement eligibility, the member may submit a service retirement application at the same time as the disability application. If approved for disability benefits, the annuity would revert to the higher amount. A disability retiree can choose payment Option B without any beneficiary age restrictions.

17. Disability Application Filing The application must be received by PEBA within 90 days of the date that the member terminated employment and prior to any service retirement date. If the member is unable to submit the application himself, the employer may submit a disability application for the member.

18. Disability Application Filing (continued) The employer cannot select a payment plan or designate beneficiaries on behalf of the member. For urgent cases, the member or employer may fax the disability application to the Customer Services Annuity Claims Unit at 803-737-7752. This will begin the required 30-day waiting period only.

19. Disability Application Filing (continued) A properly signed application from the member selecting a payment plan and designating beneficiaries must still be submitted as soon as possible for further processing.

20. Disability Retirement Application Forms completed by the member: – Form 6151S for SCRS, 6151P for PORS Form 6151S 6151P – Form 6251 Form 6251 – Form 6255 Form 6255 – 7202 7202 – 7204 7204 – Form 6352, Page 1 (retiring member’s checklist) Form 6352 Forms completed by the employer: – 6201- Retirement Date Certification (through EES) 6201 – 6253 6253 – 6254 6254 – Form 6352, Page 2 (employer checklist) Form 6352

21. Disability Retirement Approval The effective date of retirement is 30 days from the date the application was received or the day following the date of termination, whichever is later. The disability approval is valid for up to nine months from the date PEBA received the application.

22. Disability Review The disability review process can take approximately three months. A letter will be mailed to the member and the employer when a decision is reached. If the member’s claim is denied, notification will be sent to the member via certified mail.

23. Disability Appeals Process Member has one year from the date the denial was received to file an administrative appeal. If the final agency determination upholds the denial, then the member has 30 days to appeal to the Administrative Law Court. A member may appeal a decision of the Administrative Law Court to the South Carolina Court of Appeals.

24. Disability Retirement Benefit ( For Applications Received on or after January 1, 2014) SCRS: disability retirement eligibility based upon approval for Social Security disability benefits PORS: initial approval for disability retirement benefits based upon current, job-specific standard. Continued receipt of PORS disability retirement benefits after three years based upon approval for Social Security disability benefits 24

25. Average Final Compensation (AFC) SCRS and PORS Class Two Members: – Average of three highest years of earnable compensation SCRS and PORS Class Three Members: – Average of five highest years of earnable compensation SCRS Class Two and Three Members: – After December 30, 2012, earnable compensation does not include pay for overtime not mandated by the employer 25

26. Determining a Member’s Monthly Annuity Perform a benefit estimate for the member by logging into the Electronic Employer Services (EES) website.EES Enter the member’s Social Security number where indicated for READI. Click “Benefit Estimate” and follow the prompts.

27. Payment Plan Option A Retirement Formula Example Step 1 Total 12 or 20 highest consecutive quarters of earnable compensation and divide by 3 or 5 to determine your average final compensation (also referred to as AFC). Step 2 SCRS members multiply the result of Step 1 by 1.82%. PORS members multiply the result of Step 1 by 2.14% Step 3 Multiply the result of Step 2 by years, months, and days of creditable service. Step 4 Divide the result of Step 3 by 12 for your gross monthly Option A annuity amount. Early retirement penalties and/or reductions may apply to SCRS members. Reduction factors will apply to members who select a joint retiree/survivor payment plan (Option B or Option C).

28. Payment Plan Option A Retirement Formula Example (continued)

29. Unused Leave at Retirement Class Two members: – An amount up to and including 45 days’ pay for unused annual leave from your last termination payment – Service credit for up to 90 days of unused sick leave from last employer Class Three members: – Annual leave payouts are not included in AFC and unused sick leave is not included in service credit 29

30. Reporting the Unused Leave Complete the Certification of Final Retirement Deduction through EES. The payment for unused annual leave will be reported after the member terminates employment using through EES.

31. Returning to Covered Employment Service Retirees A service retiree may return to covered employment with no earnings limitation after a bona fide 30 calendar day separation from service. The separation from service requirement does not apply if the member is hired by a private employer. A member can use TERI participation to satisfy the 30-day separation from service requirement. However, there must be a bona fide severance of employment between the end of a member’s TERI participation and the rehiring of the member.

32. Returning to Employment Disability Retirees A disability retiree may return to covered employment after a bona-fide 30 consecutive calendar day separation from service. However, a disability retiree is subject to an earnings limitation equal to the difference between the adjusted AFC and amount of annual disability annuity he receives from the Retirement Systems. A disability retiree’s earnings limitation is based on a calendar year. Disability retirees receive a letter every February detailing the amount of the year’s earnings limitation for public and private employment. See sample letter in appendix.sample letter

33. Returning to Employment Disability Retirees An employed disability retiree who continued to receive retirement benefits after his/her earnings exceeded the earnings limitation is required to repay PEBA for the benefits he/she was not entitled to receive. The member will then be placed in a suspended status until January 1 unless he/she terminates his/her employment. Upon termination, the member’s disability retirement benefits may be reinstated and any overpayment will be collected by PEBA.

34. Returning to Covered Employment as a Retiree Complete Notification of Employed Retiree Form 1114 if the employee is receiving a disability annuity.Form 1114

35. Returning to Covered Employment after Retirement SCRS & PORS Class Two and Three members: – $10,000 per year earnings limitation Earnings limitation does not apply to those members who retire after age 62 (SCRS) or age 57 (PORS); or to those SCRS Class Two members who enter the TERI program after January 1, 2013* Earnings limitation does not apply to those members who retired prior to January 2, 2013. Earnings limitation does not apply to members in elected and certain appointed positions. – 30 day break in service requirement *Earnings limitation does not apply ONLY while these members participate in TERI.

36. Returning to Covered Employment Working 48 Continuous Months If a retiree returns to covered employment and works 48 continuous months for a covered employer with an annual salary of at least 75 percent of the AFC used to calculate his retirement annuity, the retiree may again join a retirement plan administered by PEBA as an active member.

37. Qualified Domestic Relations Order (QDRO) A QDRO is a court order that gives a former spouse the right to a portion of a member’s retirement annuity. The QDRO outlines how to disburse the money in the event that the member retires, withdraws his contributions, or dies. A divorce decree is not a QDRO. Attorneys may view a model QDRO and QDRO guidelines on our website.

38. Summary Quiz Can a member accrue more service credit after he retires? If a member is active in SCRS and PORS, can he retire in one system and continue working and accruing service credit in the other?

39. THE LANGUAGE USED IN THIS PRESENTATION DOES NOT CREATE ANY CONTRACTUAL RIGHTS OR ENTITLEMENTS AND DOES NOT CREATE A CONTRACT BETWEEN THE MEMBER AND THE SOUTH CAROLINA PUBLIC EMPLOYEE BENEFIT AUTHORITY. THE SOUTH CAROLINA PUBLIC EMPLOYEE BENEFIT AUTHORITY RESERVES THE RIGHT TO REVISE THE CONTENT OF THIS PRESENTATION. This presentation is meant to serve as a guide but does not constitute a binding representation of the South Carolina Public Employee Benefit Authority. Title 9 of the South Carolina Code of Laws contains a complete description of the retirement benefits, their terms and conditions, and governs all retirement benefits offered by the state. State statutes are subject to change by the General Assembly. Employers covered by the South Carolina Public Employee Benefit Authority are not agents of the South Carolina Public Employee Benefit Authority. Disclaimer

40. Questions