SCERA TIMES Sonoma County Employees’ Retirement Association
FALL 2015
Leaving Your Job Before Retirement Eligibility? You Have Options What happens to your SCERA retirement account if you leave employment before you are eligible to retire? You will need to make a decision, and SCERA is here to help. SCERA is notified by the employer whenever an employee separates from employment. If you are not retiring, SCERA will send you a letter explaining your options and asking you to let us know your choice. Options vary, depending on the amount of accumulated service credit you have when you terminate your employment. Remember, you have contributed money to your SCERA account, and that money, and any interest it has earned, belongs to you. Take a refund Once you terminate employment, you have the option of taking a refund of all your contributions, plus the interest those contributions have earned. You can roll the funds to another tax-qualified retirement account without tax consequences, you can have the refund paid directly to you or a combination of both. If the refund is paid to you, all pre-tax contributions plus interest will be subject to tax withholding per the Internal Revenue Code. The refund process takes six to eight weeks from your last pay date. Establish reciprocity Perhaps you are leaving your job in order to take a new position with another public agency in California. If so, establishing reciprocity between the two systems, or linking them together, helps encourage a career in public service. If you establish reciprocity, and when you are eligible to retire, you must retire from both systems on the same day. You will receive a pension from each system based on the service credit earned in each system. The general rules for reciprocity are that you must leave your accumulated contributions on deposit with SCERA, you must be a member of the new retirement system within six months of your termination from the SCERA employer agency, and you cannot be a member of two
retirement systems at the same time. SCERA staff is happy to help you through this process. Leave your funds with SCERA and retire at a future date If you do not meet the eligibility requirements to retire, you can leave your funds on deposit with SCERA and collect a lifetime monthly pension at some time in the future. But just how long will you have to wait? That future “retirement eligible” date depends on a couple of factors. The first factor is whether you have accumulated five years of retirement service before leaving employment. If you don’t have five years of retirement service, the date you will be eligible to begin collecting a retirement benefit is age 70. If you do have at least five years of service credit, you may be able to collect your benefit sooner. Your first eligible retirement date is the day you would have been able to retire if you had remained a full-time employee. So you need to know the retirement eligibility rules for your Plan. Continued on page 2
Continued from page 1 Plan A General Members
SCERA Times SCERA Board of Retirement Brian Williams, Chair
Neil Baker
Michael Gossman
Greg Jahn
John Pels
Christel Querijero
David Rabbitt
David Sundstrom
Joe Tambe
Bob Williamson
Board of Retirement Meetings Meetings are generally held at 8:30 a.m. on the fourth Thursday of the month in the SCERA Board Room. Executive Staff Julie Wyne
Administrator
Kelly Jenkins
Assistant Administrator
Editorial Staff Elizabeth Anderson Benefits Coordinator
• • •
Complete 10 years of service and reach age 50, OR Complete 30 years of service regardless of age, OR Reach age 70 regardless of the amount of service credit.
Plan A Safety Members
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Complete 10 years of service and reach age 50, OR Complete 20 years of service regardless of age, OR Reach age 70 regardless of the amount of service credit.
Plan B General Members
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Complete 5 years of service and reach age 52, OR Reach age 70 regardless of the amount of service credit.
Plan B Safety Members
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Complete 5 years of service and reach age 50, OR Reach age 70 regardless of the amount of service credit.
When SCERA sends you the letter about your options, it will include your first eligible retirement date, and an estimate of the lifetime monthly benefit you might be eligible to begin receiving on that date. What happens if you come back to work for a SCERA employer in a SCERA-covered position? As long as you left your funds on deposit with SCERA, you will start earning service credit again, which will add to your future retirement benefit. For more information on this topic, visit the Retirement Planning pages of www.scretire.org or contact SCERA.
The SCERA Times is published for
members of the Sonoma County
Employees’ Retirement Association
Comments and suggestions should be
directed to:
[email protected]
Or contact SCERA at:
433 Aviation Blvd., Suite 100
Santa Rosa, CA 95403
(707) 565-8100
[email protected]
www.scretire.org
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SCERA welcomes Wendy Serrano to the Member Services team. Wendy comes to SCERA from a career with JDS Uniphase Corporation, where she managed benefits for employees throughout the United States. Welcome Wendy!
I’m Retired. Can I Go Back to Work? A SCERA retiree may work for a SCERA-participating employer without affecting your monthly retirement benefit as long as you comply with the requirements of California retirement law and federal tax law. These rules have changed over the past few years, so it’s time to take a fresh look, because the consequences of breaking these rules are severe. 180-day break in service General members must have a 180-day break in service following retirement before returning to work for a SCERA employer. A General member can return to work before the end of the 180 days only if the
employer such as a temp agency. If the 180-day break is not satisfied, it is a violation of the statutes governing SCERA. Your retirement benefits already paid must be repaid, and your benefits will be suspended until there is a 180-day break in service. 60-day break in service The 60-day break in service has to do with the age at which you retire, and cannot be waived. There are two categories for the 60-day break. The first applies to anyone who retires before normal retirement age (58 for General members and 50 for Safety members). For those members, SCERA’s plan regulations require a 60-day break following retirement, or your retirement benefits already paid must be
repaid and your benefits will be
suspended until there is a 60-day break in service or you reach normal retirement age. The second category is based
on federal and state tax
requirements, and applies to
anyone retiring prior to age 59 1/2. If the 60-day break is not
satisfied, the retiree’s retirement
benefit may be subject to
substantial tax penalties until you turn age 59-1/2, or until there is a 60-day break in service.
appointment is necessary to prevent work stoppage in an emergency and is approved by the Board of Supervisors in a public meeting (not on the consent calendar). Public safety officers (the definition of “Public Safety Officer” is pursuant to Government Code section 3301 and may differ from SCERA’s Safety classification) and firefighters are generally exempt from the 180day separation requirement if they return to work in a public safety officer or firefighter position. The 180-day restriction applies to working in any capacity — as an independent contractor, consultant, contract employee or working through a third-party
960-hour limit After meeting the break-in-service requirements, SCERA retirees may continue to receive their retirement benefit during extra help employment with a SCERA employer. However, such employment is limited to 960 hours during each fiscal year (July 1 to June 30). Working for non-SCERA employers After your retirement you may work in any occupation or employment for an employer other than one of SCERA’s participating employers, and there is no impact on your SCERA benefit. The only exception is that you may not work for another agency (such as a temp agency) and be assigned to work for a SCERA employer.
For more information, visit www.scretire.org/After-You-Retire/Working-After-Retirement/
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The Lie that Keeps You Safe Security is important—whether it’s your home, your money, or your identity you are protecting. But what happens when you have set up a security system that even YOU can’t figure out? It’s like putting something away in a safe place and then forgetting where you put it. At SCERA, we’ve helped people who have forgotten the security system they established for access to MySCERA. We can help to a certain extent, but when it comes to helping you figure out the answers to your challenge questions, there’s only so much we can do. Here’s a suggestion: For your challenge questions, use the same answer that only you will know, for every question. For instance if the question is “What high school did you graduate from?” don’t answer with the true answer, because that is information someone can look up on the internet. But if your answer to every question is “brown cat” no one but you will know what that is. And it will be easier to remember just that one answer. In an article about security on Credit.com, experts offer some advice about answering those questions. “So what should you do? Lie. You heard me—lie through your teeth. Fabricate, prevaricate, dissemble and
say things that resemble nothing that might be construed as being even the slightest bit truthful regarding the particulars of your life. Lie like you were in a nose-growing contest with Pinocchio.
“Mark Twain once famously said, ‘If you tell the truth, you don’t have to remember anything.’ Wise advice, but he didn’t know anything about hackers or online security questions. When creating answers to your security questions, it’s all about consistency — not fact.” http://blog.credit.com/2014/09/keep-you-safe-from-hackers-94991/
Can You Hear Me Now? Retirees and their covered dependents that are enrolled in VSP through SCERA are eligible to participate in the TruHearing® Hearing Aid Discount Program. TruHearing is offering VSP members and their covered dependents free access to the TruHearing MemberPlus® Program that provides discounts on some of the most popular digital hearing aids on the market. The TruHearing Member Plus program includes: • Savings of up to 50% on hearing aids • Yearly comprehensive hearing exams for $75 • Three visits with a hearing professional after purchase • Manufacturer’s coverage for a one-time loss or damage for three years (replacement fee paid to manufacturer) • Three-year repair warranty • 48 batteries per purchased hearing aid
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VSP members may also add up to four guest members (parents, grandparents, siblings) for a VSP-exclusive rate of $71 each. Learn more about this VSP member offer at vsp.truhearing.com or call TruHearing at 877-396-7194. If you are not currently enrolled in VSP, you can enroll during the open enrollment period for an effective date of June 1. Look for a mailing to come directly from VSP in the spring.
Retiree Survivor’s Checklist Dealing with the death of a loved one may leave families overwhelmed and confused by all the tasks to be completed. Upon the death of a SCERA retired member certain benefits may be payable to a spouse, domestic partner, or designated beneficiaries. Here is a simple checklist your loved ones can use to assist them during this difficult time.
P Notify SCERA of the Death •
Please contact SCERA at (707) 565-8120 to report the retired member’s death as soon as possible.
•
SCERA will ask you for the following information: ¾ Name of the retiree ¾ Your name and relationship to the retiree ¾ Date of death
P Complete and Submit Required Documents •
SCERA may require certain documents depending on the benefit option chosen at the time of retirement and the designated beneficiary(ies). In general, this may include: ¾ An original certified copy of the Death Certificate ¾ A copy of the Marriage or Domestic Partner Certificate ¾ A copy of the beneficiary’s Social Security Card
•
Upon notification of the retired member’s death, SCERA will determine what benefits, if any, are payable to the retiree’s beneficiary, and will send the appropriate forms for completion.
•
Return the completed forms and documents to SCERA.
Benefit Payment(s) if Applicable P Receive The retired member’s benefits ends on the day of the death. Any benefit payable would be effective the
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following day, and paid retroactively after all required documents are received.
Board to Consider Actuarial Assumptions On November 12th the SCERA Board of Retirement will consider results from the 2015 Triennial Experience Study presented by its actuary, Segal Consulting. This study is performed every three years, with the last study presented in 2012, and looks back over three years’ worth of SCERA member/beneficiary data, comparing actual experience with the assumptions previously set by the SCERA Board. The study provides the SCERA Board with information necessary to decide whether to change any of the assumptions the actuary uses to value the liabilities of the plan. Those assumptions include: • Inflation • Investment return • Salary increases – including promotion and across the board pay increases. • Demographic – including mortality, retirement rates, and withdrawal rates. The decisions made by the Board at this meeting will be applied to the December 31, 2015 actuarial valuation.
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Sonoma County Employees’ Retirement Association
Retirement Planning EARLY/MID CAREER 1 HOUR
LATE CAREER 2 HOURS
The Path to Retirement
Planning to Retire
More than 5 years from retirement
Within 5 years of retirement
TOPICS COVERED
TOPICS COVERED
• • • • • • • • •
Understanding your plan SCERA benefits Membership milestones Calculating your benefit Leaving before retirement Reciprocity Divorce/Domestic Partner dissolution How to estimate your own benefit Tools and resources
• • • • • • • • • • • • • •
Understanding your plan Defined benefit vs. defined contribution Eligibility to retire Calculating your benefit Benefit payment options What will your beneficiary get? Reciprocity Ways to increase your benefit How to estimate your own benefit How to apply for retirement Your first check Can you go back to work? What about Social Security? Tools and resources
Enroll through www.MySCERA.org or by calling 565-8100 6
Important Dates Retiree Pay Dates October 30, 2015 November 30, 2015 December 31, 2015 January 29, 2016 February 29, 2016 March 31, 2016 April 29, 2016 May 31, 2016 Holiday Schedule November 11: Veteran’s Day November 26 & 27: Thanksgiving Holiday December 25: Christmas Day January 1: New Year’s Day January 18: Martin Luther King Day February 12: Lincoln’s Birthday February 15: Presidents’ Day May 30: Memorial Day Our office will be closed on these holidays, but we’re still available at www.scretire. org when you need information on our programs and services. Our personalized, secure website www.MySCERA.org lets you view your account information and conduct much of your SCERA business online at any time.
This newsletter was prepared by SCERA staff to help members understand issues surrounding many aspects of their retirement benefits. Every effort has been made to ensure the accuracy of the information provided. However, you should not rely solely on the information contained in the newsletter. If there is any discrepancy between information in this newsletter and legal requirements under State or Federal law, the law will govern.
re • tire
Definition
v: To begin receiving a monthly retirement allowance from SCERA.
R
The dictionary has many other definitions for the word Retire. They include “to withdraw, or go away or apart, to a place of privacy, shelter, or seclusion; to go to bed; to withdraw from office; business, or active life.” In French, retiré is a dance movement in which the dancer brings one foot to the knee of the supporting leg and then returns it to the fifth position.
At SCERA, to retire means to begin receiving your monthly benefit allowance, once you have reached retirement eligibility. If you leave employment before reaching retirement eligibility and leave your accumulated contributions on deposit, you may think of yourself as retired. But according to SCERA, you are a deferred member until you reach that date when you begin receiving your monthly retirement check.
Investment Update SCERA’s investment portfolio sagged over the most recent quarter as stocks declined amid concerns regarding global economic growth, particularly in China, the “engine” for global growth over recent years. On the other hand, the Plan’s returns over longer periods are in line with long-term expectations, which are more relevant, given the long-term nature of the system. Performance over intermediate periods are quite robust, reflecting the recovery after the Great Recession, with annualized returns of 9.0% and 9.4% over 3 and 5 years, respectively. Annualized returns over 10 and 20 years are 6.0% and 7.5%, respectively, reflecting both the peaks and troughs of complete market cycles. The Plan’s portfolio is significantly impacted by stock market movements, as nearly two-thirds of the Plan’s assets are invested in stocks from around the world. This allocation is appropriate given the long-term nature of the Plan, because although their returns are more variable than those of the other major asset categories, stocks have consistently delivered higher returns over the long term. Other assets, such as bonds, real estate and farmland, are added in smaller proportions to dampen the irregularity of total portfolio returns over shorter periods. Continued on page 8
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Investment Update (Continued) While domestic and non-US stocks were down over the quarter and year-to-date, other assets delivered positive returns, which decreased, as intended, the variability of the Plan’s total return. SCERA’s bond portfolio delivered positive, though below average, returns for the quarter and year-to-date, while the Plan’s real asset portfolio continued to deliver above average returns over these periods. The real asset portfolio currently includes real estate and farmland and will soon include infrastructure. In the interest of further diversifying the Plan’s portfolio, the Board decided earlier this year to expand the real assets portfolio to include a 3% allocation to infrastructure, making real assets 18% of total Plan assets. Examples of infrastructure investments include toll roads, ports, pipelines and power generation. The search for an infrastructure manager is underway and a selection is anticipated by the end of the year with funding expected over the following one to two years. Through the ups and downs of the market SCERA consistently maintains its long-term investment policy allocation, as this is the principle driver of the Plan’s total return over time. As a result of the Plan’s well-diversified policy allocation and solid long-term performance, as well as contributions from employers and members, the Plan’s portfolio has grown to a market value of $2.3 billion as of September 30. Sonoma County Employees’ Retirement Association SUMMARY OF PERFORMANCE (Gross-of-Fees) As of September 30, 2015 3rd Qtr YTD 1 Yr 3 Yrs 5 Yrs 10 Yrs Plan Return (Gross-of-Fees) -5.0% -1.2% 0.5% 9.0% 9.4% 6.0% Policy Benchmark -5.0% -2.4% -0.7% 7.7% 8.5% 5.6% Difference 0.0% 1.2% 1.2% 1.3% 0.9% 0.4% Assumed Rate of Return 7.50%
20 Yrs 7.5% 6.9% 0.6%
