Retirement Monitor Update: Clarification on Employees Not Covered by Social Security: February 2, 2005
This Retirement Monitor Update is being sent to provide updated, follow-up information to you regarding the hiring of new employees on or after January 1, 2005 who are not covered by Social Security.
The Social Security Protection Act of 2004 requires state and local government employers to disclose the effect of the Windfall Elimination Provision and the Government Pension Offset to employees hired on or after January 1, 2005 in jobs NOT covered by Social Security. Those newly-hired employees must sign a statement stating they are aware of a possible reduction in their future Social Security benefits.
Most State and Local units are not affected by this Social Security provision because almost all State and Local employees hired on or after January 1, 2005 will be covered by Social Security.
If you are one of the few units hired employees on or after January 1, 2005 who are not covered by Social Security, you will be required to give the new employees the Social Security Form SSA-1945 to complete. Your Finance or Payroll Officer should be able to tell you if you have positions not covered by Social Security.
For more information regarding employees not covered by Social Security, please visit the Social Security Web site at or call them at 1-800-772-1213.
Retirement Monitor Update: Earnable Allowance Increase & Annual Compensation Limits: February 4, 2005
This Retirement Monitor Update provides information on two important topics - Annual Compensation Limits and Earnable Allowance Increase.
Annual Compensation Limits
Federal and State laws impose limits on the amount of a member’s compensation that is subject to contributions to qualified retirement plans. The limitations for calendar (tax) year 2005 are as follows:
- For any member of a state-administered retirement system who was hired prior to January 1, 1996, the annual limit on compensation subject to retirement contributions in calendar (tax) year 2005 has been increased to $315,000.
- For any employee hired on and after January 1, 1996 who is a member or becomes a member of a state-administered retirement system, the annual limit on compensation subject to retirement contributions in calendar (tax) year 2005 has been increased to $210,000.
We want to be sure that each affected member receives credit for all months of service. Because a member’s service is credited according to the months they contributed to a retirement system, employers should notify the Retirement Systems Division in January 2006:
- If a member’s compensation exceeded the limits during calendar year 2005; and
- The months that the member was paid but was not making contributions to the system because they had exceeded the limit.
The Board of Trustees of the Retirement Systems has increased the amount of compensation that a reemployed retiree may earn if they return to work in the same retirement system under which they retired by 3.3%, or $25,420.00.
For more information on either of these subjects, please see the official administrative memorandums by clicking below:
Retirement Monitor Update: Updated Forms: Feb. 7, 2005
Newly revised versions of Form 2 (New Member Enrollment) and Form 2C (Change in Beneficiary for Active Members) are now available on the Retirement Systems Division website. On each of the forms, the information regarding the local death benefit has been revised to reflect the change in the benefit amount to equal the highest 12 consecutive months of salary during the 24 months preceding the month before death, with a minimum benefit of $25,000 and a maximum benefit of $50,000. Form 2C has also been revised to instruct retirees who wish to change their beneficiaries for the guaranteed refund to complete the form Ret-336T.
Retirement Monitor Update: Retirements Reach Record High - 60 Days Needed for Application Processing
In January 2005, the Retirement Systems Division received nearly 2500 retirement applications marking the highest total ever for any one month and a 27 percent increase over applications received in January 2004. The influx, generated by the beginning of the "baby boomer" retirements, has caused delays in retirement processing and prompted a plea from the System to employees planning to retire: Please submit applications 60 days before your retirement date. Approximately 65 percent of the applications received in January were submitted 30 days or less before the employee retired.
To increase the likelihood that employees receive their first retirement payment as requested, especially in high volume months, such as January and July, please note the following:
- Those who apply earliest are the most likely to receive their first check as requested. Applications should be submitted to the retirement division a minimum of 60 days prior to the retirement date
- Applications are processed based on the date the retirement system receives the application, not the date they were signed and submitted to the employer
- When retirement options are chosen, Form 6E should be returned to the retirement office as soon as possible.
The Retirement System projects a 141% increase in retirements over the next 17 years as the baby boomer generation makes its exodus from the workforce and has taken steps to prepare for the increased workload.
Improving work processes has been a consistent focus for the Division since 2000. In addition, a new computer system, scheduled to come online in 2007, will integrate the antiquated technology currently used and significantly reduce the turnaround time on retirement applications. State law permits employees to execute (sign) and submit their application for retirement benefits as early as 90 days prior to their retirement date.