Table of Contents
Introduction
Management of the System
Type of Plan and Contributions
VMERS Group Comparison Chart
Vesting and Membership in the System
Enrollment
Beneficiary Designation
Annual Statement of Benefits
Separation of Service
Termination of Service
Tax on Refunds
Vested Deferred Membership
Transfer of Membership - Portability
Transfer between Retirement Groups
Retirement Service Credit
Purchasing Credit
Military, Legislative or Jury Duty Leave Credit
Eligibility for Retirement
Applying for Benefits
Tax on Retirement Benefits
Calculating Your Retirement Benefits
Selecting the Option Payment Plan
Survivor Benefits (Death in Service)
Cost of Living Adjustment - COLA
Employment after Retirement
Changes in the Monthly Pension Check
Actuary's Report
Other Retirement and Survivorship Benefits
Introduction
The Vermont Municipal Employees' Retirement System is a uniform, state-administered pension plan for municipal employees of the State of Vermont. It was established effective July 1, 1975 and is governed by Title 24, V.S.A., Chapter 125. Your participation in this retirement plan forms a solid foundation for your retirement income and together with your personal savings and Social Security; you can look to your benefits from the System to help you plan for a secure and comfortable retirement.
Management of the System
The general administration and responsibility for formulating administrative policy and procedures of the retirement System for its members and their beneficiaries is vested in the Board of Trustees consisting of five members. They are the State Treasurer, two employee representatives elected by the membership of the system, and two employer representatives--one elected by the governing bodies of participating employers of the system, and one selected by the Governor from a list of four nominees. The list of four nominees is jointly submitted by the Vermont League of Cities and Towns and the Vermont School Boards Association.
The Board appoints an executive secretary that acts as executive officer for the Board. The administrative functions of the VMERS are managed by the Director of Retirement Operations and carried out by the staff. Board meetings are open to the public and members are welcome to attend at any time. Administrative appeals or other claims should be addressed to the Board for action at its next meeting. The Board generally meets once every two or three months.
Type of Plan and Contributions
The Defined Benefit Plans of the Vermont Municipal Employees' Retirement System are actuarial reserved, joint-contributory programs. In these plans, the members and their employers make contributions to the fund, qualified as a tax-exempt organization under Sections 401(a) of the Internal Revenue Code (IRC). These funds are invested and interest earnings on the investments are placed in reserve to pay benefits to the retired members and beneficiaries of deceased members. The law requires the retirement fund to remain in actuarial balance. This guarantees to the members the availability of funds to pay their benefits when they retire.
With a defined benefit plan a participant's actual retirement benefit is specifically determined by a formula, which contains three variables; the participant's service credit, the participants age at retirement, and their average final compensation. The final benefit is not dependent on the amount of contributions made to the plan.
VMERS Group Comparison Chart
Vesting and Membership in the System
Retirement coverage extends to the following classification of employees:
- Employees of a school district who work on a regular basis for not less than 30 hours a week and for not less than 1040 hours for the school year.
- All other municipal employees who work on a regular basis for not less than 24 hours per week and for not less than 1040 hours in a year.
Employees in these areas must join the system as a condition of employment and begin contributions immediately upon date of hire.
You will be vested in the VMERS upon the attainment of five (5) years of creditable service.
Enrollment
Enrollment is mandatory and you must be enrolled in the VMERS as soon as you meet the eligibility requirements previously described, regardless of any probationary period your employer may have. Your personnel officer should notify the system of your employment with a Notice of Hire form provided by the Retirement Office and wages and contributions are reported on a quarterly report. You will be sent notification of your enrollment and a designation of beneficiary form, and asked to submit the beneficiary form to the VMERS as soon as possible.
* For more information about the Defined Contribution plan, please call the Retirement Office for details.
Beneficiary Designation
A beneficiary(ies) is the person(s) to whom you want your accumulated contributions plus interest to be refunded and/or any available death benefits to be paid to if you die before retirement. However, a death-in-service benefit is only payable to your designated dependent beneficiary.
You may choose any person or your estate, as your beneficiary and you may change your designation at anytime by filing the appropriate form with the VMERS. All designation of beneficiary forms must be notarized.
If you do not complete a beneficiary designation form, any return of contributions or benefits payable in the event of your death will be payable according to applicable Vermont law.
Annual Statement of Benefits
Each Fall, a computer printed statement is mailed to active members of the system. These statements should be checked over carefully to verify if we have accurate information on the member's account, i.e., date of membership, beneficiary, address, etc. The statement date is as of June 30 of the year sent. The first annual statement would be mailed to a new member in the fall after completion of a full fiscal year of earnings (July 1 - June 30).
The first paragraph explains what a member would receive if they continue working to normal retirement age. The second paragraph explains what a member has earned to date and what a member would receive if they were to terminate their job immediately The statement is calculated based on current salary. All the figures are annual amounts. The third paragraph shows what the member's contributions are to date and the interest that has accrued. This paragraph also shows who is designated as primary beneficiary: if a beneficiary isn't named, ESTATE will appear. If a member has questions regarding the annual statement, they should call our office. It is also very important that addresses are kept up-to-date with the office so that this and other mailings will reach all members.
Separation of Service
If you leave service before you have acquired five consecutive years of creditable service, and withdraw your accumulated contributions, your service credits will be cancelled. You may leave your contributions in your account for up to three (3) consecutive years before the VMERS will automatically withdraw your membership and refund your contribution.
If you separate from service after you have accumulated five or more consecutive years of creditable service, and withdraw your accumulated contributions, your service credits will be cancelled. You may leave your contributions in your account for up to three (3) years before the VMERS will automatically put your account in a vested deferred status, if you have not returned to service. As a vested, deferred member you may draw your accrued benefit at normal retirement age.
Termination of Service
Membership in the retirement system is terminated by the death of a member, retirement of a member or occurs when a member withdraws accumulated contributions regardless of the number of accumulated years of creditable service. For non-vested members, termination of membership will occur when you have not been an active member of the system for more than three (3) consecutive years after separation.
In addition, membership shall be terminated if a reduction in hours to less than the qualifying hours occurs for a period exceeding 3 consecutive years. However, if the member has 5 or more years of creditable service, they are entitled to vested rights.
Tax on Refunds
If a member terminates employment and wishes to take a refund of their contributions plus accumulated interest in lieu of a pension, they are subject to a mandatory 20% federal tax withholding plus a possible 10% excise tax (if the member is under age 59 1/2) on the "taxable portion" of said refund. The taxable portion of a refund is the interest paid by the system on the member's account, plus all employee contributions made on a pre-tax basis. The only way to avoid the 20% mandatory withholding on a withdrawal is to direct the Retirement System to roll over the taxable monies to another qualified tax-sheltered plan. Taxable amounts of less than $200.00 are not subject to the mandatory withholding. This withholding does not apply to pension benefits. This federal regulation became effective January 1, 1993 for all lump sum distributions payable to a member at time of withdrawal or termination.
Vested Deferred Membership
Even if your active membership in the VMERS ends before you are eligible to retire, you may be entitled to a pension from the VMERS in the future. Once you have five or more years of service credit, you are vested and cannot lose your credit unless you elect to withdraw your contribution balance.
Transfer of Membership - Portability
One of the advantages of having a uniform retirement system for most municipal employees is that retirement credit is portable from one municipality to another and from one system to another.
If a member leaves employment with one town and begins employment with another participating municipality, there is no break in their membership with the retirement system as long as they have not withdrawn their membership from the VMERS during the interim.
Members who leave their employment as an employee and join either the Vermont State Teachers' Retirement System or the Vermont State Employees' Retirement System may transfer their retirement credit to either system within one year of their new employment, and vice versa, provided that they have not received a refund of contributions or any retirement benefit payments.
If a dual membership is established in one of the Vermont Retirement Systems, you will be notified by the retirement office of your option to transfer.
Transfer Between Retirement Groups
Employers may offer a higher benefit group to employees under certain date restrictions annually. Once the new benefit group is offered, employees have the option to remain in the current retirement group or transfer to the higher group. If the employee does not transfer to the higher group at that date, the employee has the right to elect the higher benefit group at any future December 31. The actual transfer to the new group would be effective the following July 1. For example, if your employer offered group B effective July 1, 1997, and you decided not to transfer at that time, you have the right to transfer effective any subsequent July 1. You must complete an election form to VMERS prior to any December 31, for membership in group B the following July 1.
The annual timeframe for employer election to Group B or Group C is as follows:
- Before 9/30 - Legislative body offers new group to specified employee groups.
- 10/1 - 12/31 - Members are provided with the election form to make the individual election to join the new group for July 1 effective date. Once the employer has offered the coverage, the employee may elect to transfer to the higher group any subsequent July 1 by notifying the Retirement Office prior to December 31 of a year. The only stipulation if you transfer at a later date is that three years of creditable service needs to be completed in the group to be eligible to retire under the group benefits.
- 1/1 - 6/30 - Employer budgets for next fiscal year to include increased employer rate. All newly hired employees of specified group, hired after the employer vote, must participate in the new Group established.
Retirement Service Credit
"Creditable Service" means that period of continuous service between date of hire, under qualifying hours and termination of service during which the employee makes contributions.
Creditable service may include the following:
- Prior service - continuous service for a participating employer prior to the establishment of the system July 1, 1975. Prior service has been granted for up to 20 years for such continuous service providing the member joined the system effective July 1, 1975. This is not available to members who join the system after July 1, 1975.
- Membership service - service after joining the system for which contributions are made is credited service.
- Eligibility service - members joining the system after July 1, 1975 but before July 1, 1990 receive credit for the 3-year eligibility period prior to joining the system. Members joining the system after July 1, 1990 but before July 1, 1999 receive credit for the 1-year eligibility period prior to joining the system.
Requirements for a benefit from this system would include combinations of the different kinds of creditable service. It may also combine service built in the different groups that are offered in VMERS.
If you transfer qualified service credit from another plan, it will be included in your accumulated service credit. In addition, you may be eligible to purchase or be granted some types of qualifying service credit.
You will lose your retirement service credit and any retirement benefit if you terminate and withdraw your accumulated contributions. However, if you have five or more years of service and leave your contributions in the System, you are guaranteed a retirement benefit at the normal retirement for your Group plan. All you need to do is contact the retirement office a few months before your planned retirement for an estimate and application forms.
Purchasing Credit
You may purchase retirement credit for a number of situations including service in the military, Peace Corps, or VISTA (after completion of 15 years of service); as an employee in another state or municipality; as a teacher in a public or private school; and with the State of Vermont (other than temporary or contractual employment) for which you received no retirement credit.
While the Retirement Office can readily provide you with the actual cost to make the purchase, our experience has shown that acquiring the verification or documentation of prior service can be a lengthy process. To that end, we encourage all members who are interested in following through with a purchase to begin the verification process as soon as possible. Service credit documentation must be reviewed by our office and determined eligible prior to submitting payment. Under the law purchase payments must be completed within a five-year period prior to retirement in equal annual installments. Payments must also indicate whether they are being made on a pre-tax or post-tax basis.
You will need verification of prior service for any of the above categories indicating the years you worked, position held, whether you were full-time or part-time and whether you are eligible to receive a pension associated with the service. Please complete the Application To Purchase Service Credit Form and return it to our office with the verification/documentation of your service. You will also need to indicate the number of years you are interested in purchasing and the timeframe for making the purchase. Upon receipt of this information we will issue a service purchase letter including the eligible years to purchase, the purchase cost, and the time-frames associated with the purchase.
You may also purchase service credit from membership in the System, which was lost due to a withdrawal.
A member may also make a contribution to increase the benefit percentage of a previous, lower benefit group to equal a higher benefit group. For example, a Group B member may increase the value of previous service earned as a Group A member to equal Group B service.
All of these purchase opportunities are cost neutral to the system. This means that you must pay the full cost of the added retirement benefit received.
There can be no parallel retirement rights in any other system for the credit you purchase. You should contact the Retirement Office for final cost figures and return on investment information as well as the application procedure.
Important Note: You may make purchases with post-tax dollars or with pre-tax dollars as a direct roll-over from your 403(b), 457, 401(a), 401(k), or IRA account.
Military, Legislative or Jury Duty Leave Credit
If a member is required to take a leave of absence from their present employer to serve in the military, they are entitled to credit in the retirement system for that period of leave. If a member takes a leave of absence to serve in the Legislature or on jury duty, or because of a worker comp injury, they are entitled to credit in the retirement system as well. Employers are notified that they must report such leaves to the system, but it is the responsibility of the employee to be sure that the proper credit is made.
For example, if a member takes two weeks of leave without pay for military duty, the service credit that the member receives for that fiscal year may be reduced because of the off-payroll status unless the Retirement Office has received proper notification. The annual statement should always be thoroughly reviewed, and if there appears to be a discrepancy or question about the service credit, the Retirement Office should be contacted, immediately.
Eligibility for Retirement
Normal Retirement
- Group A - age 65 and the completion of 5 years of creditable service; or as early as age 55 and the completion of 35 years of service.
- Group B - age 62 and the completion of 5 years of creditable service; or as early as age 55 and the completion of 30 years of creditable service.
- Group C - age 55 and the completion of 5 years of creditable service.
- Group D - age 55 and the completion of 5 years of creditable service.
Early Retirement
- Group A - age 55 and the completion of 5 years of creditable service.
- Group B - age 55 and the completion of 5 years of creditable service.
- Group C - N/A
- Group D - age 50 with the completion of 20 years of creditable service.
Vested Deferred Retirement
If you terminate service before age 55, and accrued five (5) or more years of service before termination you may be eligible for a vested deferred retirement benefit.
Disability Retirement
"Disability Retirement" means a monthly benefit for the member who becomes disabled either physically or mentally to the extent that he cannot continue to perform his duties as an employee and whose disability appears to be permanent, and that member should be retired.
If you become disabled, you are eligible to apply for disability retirement if you have acquired a minimum of 5 years of creditable service, your application is filed not later than 90 days after the date you separated from service, and you have met the criteria listed above. The disability must exist at the time of separation. Your application and all medical records pertaining to your disability are subject to review and certification by the Medical Review Board (MRB) and approval by the Board of Trustees that you are disabled on the basis of medical evidence. You are considered eligible for a disability pension if it is certified by the MRB that you have a physical or mental condition that prevents you from performing the duties of your position. Approval for a disability retirement is automatic if you have already been approved for a disability benefit by the Social Security Administration.
For Group D members, there is an additional benefit payable which is equal to 10% of AFC for each dependent child (up to 3 children). The additional benefit is payable until the child reaches age 18, or age 23 if a dependent student. These benefits are reduced by any Social Security benefit payable.
An annual review of the status of your disability may occur. Your eligibility ceases at the end of the month in which you recover and/or are determined no longer disabled. Termination of a disability pension does not affect your right to apply for a transfer to a normal or early pension benefit, if qualified.
You should contact the Retirement Office if you have any questions concerning disability benefits or the application process
Applying for Benefits
Retirement benefits are not automatic; you must apply for them. Contact the Retirement Office during the year that you plan to retire for an estimate, application materials, and tax forms. Upon written application you may retire on a service retirement allowance on the first day of the calendar month in which the benefit is to begin, or following your separation from service, whichever date is later, provided that you have attained age and accrued the creditable service required for your Group.
Retirement benefits are paid monthly on the last business day of the month, starting with the end of the month in which your retirement occurs. Your retirement date is normally the first day of the month following your last day at work. Your written application must be filed prior to payment of retirement benefits.
Electronic banking is mandatory for all new retirements after January 1, 1999. A retiree shall have the monthly check electronically deposited to a checking or savings account. The pension is in the retiree's account on the last working day of each month.
Remember that we are here to help you plan your retirement. It is recommended that you request a retirement estimate a year or two in advance to assist you in your retirement planning.
Tax on Retirement Benefits
Retirement benefit payments are comprised of ANNUITY (the portion of the benefit that comes from the member's contributions), and PENSION (the portion paid by the retirement system).
Most of your benefit will be taxable, but an exclusion ratio will be applied so that a specified amount will be excluded from tax if you made contributions prior to 1999 or on an after-tax basis. This exclusion ratio is based on the total after-tax contributions that you made during employment, or from a post-tax purchase of service credit, prior to retirement.
Federal tax regulations require that we withhold tax on retirement allowances for all recipients unless a waiver of withholding form is filed with this office. Members will receive more detailed information regarding tax withholding at the time they retire.
A Form 1099R will be mailed following the end of each calendar year that provides the necessary information to file tax returns. It should be noted that the payment dated December 31 would be included in that calendar year total, even though it may not be received until January. The Retirement Office is, however, unable to further assist or advise in the preparation of members' tax returns. Retirees should consult an accountant or attorney, or Federal and State tax authorities, for any other information concerning taxation of the allowance received from the VMERS.
A monthly statement itemizing the current and year-to-date withholdings is mailed to each retiree only when a change occurs in the gross or net amounts.
Calculating Your Retirement Benefits
Normal Retirement
One of the components in calculating the amount of your pension benefit is determined by your Average Final Compensation (AFC). Your AFC is the average of your five (5) highest consecutive years of earnings for Group A members, three (3) highest consecutive years of earnings forGroups B and C, and two (2) highest consecutive years of earnings for Group D.
Other components are your age and number of years of creditable service at retirement or termination. The years of service, which a member is credited with in the retirement system may differ from actual employment history. The actual benefit is dependent on the Group(s) with serviceable credit, as well as the benefit structure of that Group as defined in the statute.
The maximum benefit that a Group A or Group B member is eligible to receive is 60% of AFC. The maximum benefit that a Group C or Group D member is eligible to receive is 50% of AFC.
Early Retirement
Members in Group A and B may retire as early as age 55 if they have a minimum of 5 years of creditable service. The reduction of their basic earned benefit for early retirement is 1/2% or .005 per month for every month (6% per year) under normal retirement age for the group you are retiring from. Thus a Group A member retiring at age 59 would incur a 36% reduction, and would therefore receive 64% of his earned benefit, and a Group B member of the same age would receive 82% of his earned benefit.
Example:
- (Group A) 6 years x 6% = 36% reduction
- (Group B) 3 years x 6% = 18% reduction
Disability Retirement
If you are unable to perform your duties because of a disability, which is likely to be permanent, you may apply for an ordinary disability retirement benefit if you have five years of service. Your disability benefit is calculated the same way as a normal benefit.
Please note that you must apply for a disability retirement benefit within 90 days after separation of service.
Vested Benefit
If you have 5 or more years of service and leave employment before age 55, you are entitled to a vested retirement benefit provided that you do not withdraw your contributions. Your vested retirement benefit is payable to you at the normal retirement age for your group, and is calculated in the same way as a normal retirement benefit.
You may always request a refund of your retirement plan contributions plus accumulated interest even after your account has been placed in a vested, deferred status. A refund will cancel your retirement service credit and any right to future retirement benefits.
Selecting the Option Payment Plan
Five payment plans for Group A, Group B, and Group C members are available at retirement. The member must furnish the name and date of birth of his/her proposed beneficiary for the calculation of survivorship options. Members are urged to consider carefully the payment plans available for their election at retirement. Once a payment plan or option is selected at retirement, the option can NEVER be changed. The options are summarized as follows:
Life Only (No Survivorship)
The maximum option provides the largest benefit payment computed under the Standard Formula to the retiree for his/her lifetime. All payments cease upon the death of the retiree. A proportionate benefit is payable to the designated beneficiary(s) for the month in which the retiree's death occurs. In addition, the beneficiary is entitled to receive a lump sum payment representing the difference between the retiree's accumulated contributions and interest at retirement (the money contributed to the system by the retiree) and the annuity portion of the retiree's benefit which the retiree has received since retirement commenced. The beneficiary designation under this option may be changed subsequently, if the retiree chooses.
If the member lives longer than the accumulated contributions last, his payments continue to death, but there would be no balance payable to the beneficiary. This option does not provide for continuing monthly checks to the member's beneficiary.
Option 1 - 100% Survivorship (Payment to Retiree's Beneficiary)
This option provides a reduced payment to the retiree for the member's lifetime, with the provision that at the time of the retiree's death, the same or 100% of the monthly pension received by the retiree, continues to his/her beneficiary for their lifetime. The beneficiary designated by the retiree at the time of retirement CANNOT subsequently be changed.
In other words, the continued benefit is not transferable to another beneficiary. If the designated beneficiary dies before the retiree, another beneficiary could be designated to receive only the proportionate benefit payable for the month in which the retiree's death occurs.
Option 2 - 50% Survivorship (Payment to Retiree's Beneficiary)
Provides a reduced payment to the retiree for the retiree's lifetime with the provision that at the time of the retiree's death, 50% or one-half of the monthly pension will be payable to his/her designated beneficiary for their lifetime. The beneficiary designated by the retiree at the time of retirement CANNOT subsequently be changed.
In other words, the continued benefit is not transferable to another beneficiary. If the designated beneficiary dies before the retiree, another beneficiary could be designated to receive only the proportionate benefit payable for the month in which the retiree's death occurs.
Pop-Up Options
Each of Option 1 and 2 can be elected with a pop-up feature. This provides that if the retiree's beneficiary dies first, or based on the stipulations contained in a Domestic Relations Order, the retiree's benefit will increase to the amount which would have been payable under the Life Only option. As a result, the reduction in the retiree's payment is slightly greater than it would be under the options without the pop-up feature.
NOTE: The Group D option is Life Only with an automatic 70% continued monthly payment to surviving spouse at date of death.
Survivor Benefits (Death In Service)
Eligibility
Death benefits are any payment made by the retirement system to a beneficiary of a deceased member of the system. Such payments may take the form of the refund of the member's accumulated contributions, or lifetime monthly payments if the beneficiary qualifies for such payments.
Amount of Survivor Benefit
If a Group A, B or C member had at least 5 years of creditable service at the time of death, the designated dependent beneficiary may choose to receive a monthly benefit for the rest of his/her life as though the member had retired on the date of death and elected the "Option 1" 100% Survivorship plan. No previous election is required of the member. The choice is automatic for the surviving designated beneficiary. If the beneficiary wishes, the lump sum return of contributions may be elected instead of the monthly benefits.
The designated dependent beneficiary of a Group D member would receive an automatic 70% spousal survivorship with no reduction in the retirees benefit.
Other
If you are do not meet the eligibility requirements for a survivor benefit or do not have a designated dependent beneficiary, the lump sum value of your contributions and interest will be paid to your designated beneficiary or your estate.
Cost-of-Living Adjustment (COLA)
Retirees who retire under a normal retirement become eligible for their first cost-of-living adjustment (COLA) on the first day of January following receipt of twelve pension checks.
Retirees who retire under an early retirement become eligible for their first COLA on the first day of January following attainment of normal retirement age and receipt of twelve pension checks.
The COLA is based on one-half of the change in the Consumer Price Index (CPI) of the preceding June 30 and is automatically applied to the January check which is payable January 31. The maximum COLA for group A members is 2% each year. The maximum COLA for group B,C and D members is 3% each year.
Employment After Retirement
You may be employed by a participating municipality after retirement without affecting your pension, provided you are employed as a temporary employee or work under the qualifying hours for VMERS membership. You must be separated from service with a participating municipality until the first day of the month after receipt of your first pension payment. Employment outside of a participating municipality does not affect receipt of your pension. Please contact the Retirement Office if you are considering returning to work.
They will begin contributing on a new account, entirely separate from their initial retirement benefit. A member may, however, begin active membership in VSERS or VSTRS and continue to receive their pension in VMERS.
When they re-retire, the previously “frozen” benefit is eligible to resume. The member must submit, in writing, a request to resume their frozen benefit. If the member has reached vested status on their subsequent account, they must apply for a new retirement allowance which will be calculated as a separate benefit. Should a member not reach vested status on their subsequent account, the member’s contributions and applicable interest will be refunded or rolled over to an eligible financial institution.
When they retire again, both the "frozen" and any new benefits will be paid. Any previous optional election will remain in effect for the "frozen" benefit; they may elect a new option for the additional benefit.
Changes in the Monthly Pension Check
It may be necessary from time to time to change tax withholdings, the regular mailing or alternate mailing address, or make changes due to divorce or death. It is the responsibility of the retiree to notify our office in writing of any changes which must be made to your pension check. Changes received by the 15th of any month can be processed for that month. If changes are received after the 15th, we cannot guarantee that the change will occur for that month.
Actuary's Report
The law requires that an approved actuary make an annual valuation of the System's assets and liabilities. The actuarial valuation determines the financial condition of the retirement fund and the required state contribution to the System. The System's consulting actuary also does other special studies related to new or proposed legislation. A copy of the System's current and previous actuarial valuations are available and may be reviewed at the retirement office or on the VMERS website under "Financial Reports"
Other Retirement and Survivorship Benefits
Dental Insurance
At the date of retirement, members will be given a one time option to choose Dental Insurance at the full premium cost to the member. Members can also cover all eligible dependents, if applicable. VMERS will not contribute any portion of this premium. There will be a double deduction for the dental premium from your first pension check, as our office needs to set the payments up in advance of the month during which the coverage occurs.
Social Security
Some retirement systems are integrated with Social Security, and the amount of one's retirement check depends upon the benefit from the federal government. The System has no effect upon Social Security and vice versa; the two supplement one another. Remember that you have to apply for both benefits, since neither is automatic.
Full Social Security is paid at ages 65 to 67, depending on your year of birth. Employees born in 1937 or earlier are entitled to full benefits at age 65; employees born in 1960 or later will be entitled to full benefits at age 67. The full benefit age gradually increases from age 65 to 67 for those born between 1938 to 1959.
Benefits can begin as early as age 62 with a 20% to 30% reduction, depending on your year of birth. The reduction is 20% for employees born in 1937 or earlier.
Deferred Compensation
Deferred Compensation is a tax-sheltered vehicle, which allows you to increase income at retirement. The Internal Revenue Service establishes the maximum amount that may be contributed each year. The balance in your Deferred Compensation (IRS Code 457) account is payable upon termination of employment or retirement, regardless of your age.
If your municipality offers the 457 plan available through the State of Vermont Treasurer's Office, payment options are explained in more detail in the Deferred Compensation Plan booklet or at their website. Additional detailed information may be found at the Prudential Website (the deferred compensation third-party administrator for the State of Vermont).
If you still have questions regarding your retirement account or other matters about retirement, please do not hesitate to contact the Retirement Office at 1-800-642-3191 (toll free within VT only) or (802) 828-2305. The staff is always happy to answer your questions and assist in your retirement planning.
