VSERS Group G Plan Description
Table of Contents
Introduction
Management of the System
Type of Plan and Contributions
Vesting and Membership in the System
Enrollment
Beneficiary Designation
Annual Statement of Benefits
Separation of Service
Termination of Membership
Tax on Refunds
Vested Deferred Membership
Transfer of Membership - Portability
Retirement Service Credit
Purchasing Credit
Grant of Service Credit
Military, Legislative or Jury Duty Leave Credit
Approved Leave of Absence
Restoration of Service Credit
Eligibility for Retirement
Applying for Benefits
Tax on Retirement Benefits
Calculating Your Retirement Benefits
Survivor Benefits (Death in Service)
Retirement Options
Examples of Survivorship Options
Cost of Living Adjustment
Employment After Retirement
Changes in the Monthly Pension Check
Other Retirement and Survivorship Benefits
The Vermont State Employees' Retirement System for Group G members (state employees who work in certain Department of Corrections and Department of Mental Health positions) forms a solid foundation for your retirement income. 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.
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 eight members. They are the State Treasurer, the Governor's representative, the Commissioner of Human Resources, the Commissioner of Finance and Management, three members elected by the VSEA to represent active employees, and one elected by the VRSEA.
The Board appoints an executive secretary that acts as executive officer for the Board. The administrative functions of the VSERS are managed by the Director of the Vermont Retirement Systems and carried out by the staff. Board meetings are open to the public and members are welcome to attend at any time. The Board generally meets once a month.
Type of Plan and Contributions
VSERS is a public employee pension plan and trust qualified as a tax-exempt organization under Sections 401(a) of the Internal Revenue Code (IRC). It is a contributory, defined benefit plan to which its participating members make regular contributions to a trust fund and the State of Vermont deposits an annual appropriation (contribution) based on a recommendation resulting from an actuarial assumption of liabilities.
Employee Contribution Rates in effect for FY2025 can be here.
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.
Vesting and Membership in the System
Group G is a new retirement Group, effective July 1, 2023. Group G members are those employees who are first employed in the positions listed below on or after July 1, 2022, or who are members of the System as of June 30, 2022 and make an irrevocable election to join Group G: (1) facility employees of the Department of Corrections, (2) as Department of Corrections employees who provide direct security and treatment services to offenders under supervision in the community, (3) as employees of a facility for justice-involved youth, or (4) as Vermont State Hospital employees or as employees of its successor in interest, who provide direct patient care. If you are unclear if your specific job is Group G eligible, please contact the Department of Human Resources. You will be vested in the VSERS upon the attainment of five (5) years of creditable service.
Those members who worked in a Group G eligible position prior to July 1, 2023, had a one-time opportunity to make an irrevocable decision to remain in their current Group F or F* or elect to enroll in Group G. Enrollment in Group G for those first employed in a Group G eligible position on July 1, 2023 or after is mandatory and you must be enrolled in the VSERS as soon as you meet the eligibility requirements, previously described, regardless of any probationary period your employer may have. The department of personnel, payroll unit, will notify the system of your employment with their bi-weekly wage report. You will be sent notification of your enrollment and a designation of beneficiary form, and asked to submit the beneficiary form to the VSERS as soon as possible.
A beneficiary(ies) is the person(s) to whom you want your accumulated contributions plus interest to be refunded or any available death benefits to be paid if you die before retirement. You may choose any person or your estate, as your beneficiary and you may change your designation at any time by filing the appropriate form with the VSERS. All designation of beneficiary forms must be notarized or accompanied by a government issued ID.
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.
Please see the section below entitled Survivor Benefits (Death in Service). As a VSERS member, your designated dependent beneficiary is entitled to a valuable Survivor Benefit in the event you pass away while still in active service, provided you meet the vesting requirements specific to this benefit. However, only a single designated dependent beneficiary can access this benefit. This means that you have to affirmatively designate the beneficiary on a signed notarized form filed with our office, and the beneficiary must be a legal dependent. If either of these two criteria are not met, your beneficiary will not receive a Survivor Benefit, even if they would have otherwise been eligible for it.
Please take care to file your designation of beneficiary form with the Retirement Office in order to provide this important benefit to your dependent beneficiary.
Each Fall, you will be notified that you can access your annual statement of benefits. 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 statement explains what a member would receive if they continue working to normal retirement age. It also 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, fiscal year amounts. The statement also shows what the member's contributions are to date and the interest that has accrued. It 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.
If you leave State 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 VSERS 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 VSERS will automatically put your account in a vested deferred status, if you have not returned to service.
Membership in the retirement system is terminated by the death of a member or 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.
Even if your active membership in the VSERS ends before you are eligible to retire, you may be entitled to a pension from the VSERS 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
Members who leave their employment as an employee and join either the Vermont State Teachers' Retirement System or the Vermont Municipal 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.
You will receive retirement service credit for the time that you are employed and are enrolled as an active member in the System. With each paycheck, you will be credited with one twenty-sixth of a year of credit. If you are off payroll for two paychecks, for example, you will receive credit for that year for .923077 years. If you work part-time and receive a check every two weeks, you will accrue credit at the full rate; however, your lower gross earnings for the year may be reflected in a lower retirement benefit.
If you transfer qualified service credit from another plan, it will be included in your accumulated service credit. That portion of your benefit will be calculated using the rules of the system in which the service was accrued. 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 your normal retirement age or an early retirement benefit at age 55. All you need to do is contact the retirement office a few months before your planned retirement for an estimate and application forms.
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 years you are interested in purchasing and the time-frame 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.
With at least twenty-five years of service, you also may purchase up to five additional years, called "air time". Air time is non-qualifying time, as opposed to any type of actual service performed. For example, if you began employment immediately following graduation, and worked for twenty-five years as a Vermont State Employee, you could purchase the remaining five years of air time and retire with thirty years of service.
Air time cannot exceed five years of creditable service. Total military service also cannot exceed five years. Total purchase for non-military service is limited to ten years of credit, and in no case can a combined total of more than twenty years of service be purchased.
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.
You may be eligible for a grant of service credit in the VSERS for certain qualifying events. Upon application you may be granted service credit for up to three years of military service in the Korean War and Vietnam Conflict, provided you have 15 years of creditable service. You may also qualify for service credit if during your membership in the VSERS your employer granted a leave of absence to you for professional study.
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 they return to work within 90 days of discharge. If a member takes a leave of absence to serve in the Legislature or on jury duty, or because of a workers 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.
After July 1, 2000 if you take an approved leave of absence for purposes other than for professional study, service credit shall be restored upon payment of the contributions that you would have made into the system had you been employed during your absence.
You may restore service credit from a prior membership in the System, which was lost due to a withdrawal.
Normal Retirement
Normal Retirement Age for Group G members varies based on whether you were an employee prior to July 1, 2023, and any prior group membership.
If you were in Group F and elected to join Group G on July 1, 2023, you are eligible to receive a normal retirement benefit at the earliest of the following:
- Age 62 with 5 years of service,
- 30 years of service (at any age), or
- Age 55 with 20 years of service.
If you were in Group F* and elected to join Group G on July 1, 2023, you are eligible to receive a normal retirement benefit at the earliest of the following:
- Age 65 with 5 years of service,
- Rule of 87 (attainment of 87 when combining years of service and age of member), or
- Age 55 with 20 years of service.
If you were not an employee prior to July 1, 2023, and have only ever been in Group G, you are eligible to receive a normal retirement benefit at the earliest of the following:
- Age 65 with 5 years of service, or
- Age 55 with 20 years of service.
Early Retirement
You are eligible for an early retirement benefit after you have completed five years of service and have attained age 55. If you elect to draw your pension before you reach the Normal Retirement Date (NRD), a reduction will be applied to your accrued benefit based on whether you were an employee prior to July 1, 2023, and any prior group membership.:
- Group F to Group G – lesser of a) 6.00% per year; 0.50% per month; b) actuarially equivalent reduction
- Group F* to Group G – lesser of a) 6.66% per year; 0.55% per month under 20 years or 240 months of service; b) actuarially equivalent reduction
- Group G only– Actuarially equivalent reduction
Vested Deferred Retirement
If you terminate service before age 55, and accrue five (5) or more years of service before termination you may be eligible for a vested deferred retirement benefit.
Disability Retirement
There are two forms of disability retirement: accidental/occupationally-related disability and ordinary disability. With an accidental/occupationally-related disability, there is no minimum service requirement. The Board of Trustees determines if you are disabled (as the result of an on-the-job injury) on the basis of medical evidence. For ordinary disability there are two requirements: the Board of Trustees must determine you are disabled on the basis of medical evidence, and you must have at least five years of service.
If you become disabled, you are eligible to apply for disability retirement if your application is filed not later than 90 days after the date you separated from service, and you have met the criteria listed above. Your application is 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, that this condition has existed since the time of your separation from service, and that the condition is likely to be permanent.
Your disability benefit is calculated the same way as a normal benefit, except there is a minimum benefit payable of 25% of your AFC.
An annual review of the status of your disability may occur and would be based thereafter on your ability to perform any occupation. Post-disability income would be considered and can reduce your benefit. 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.
Retirement benefits are not automatic; you must apply for them. Contact the Retirement Office at least nine months prior to the date that you plan to retire for an estimate, application materials, and health insurance 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.
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, so feel free to request a retirement estimate a year or two in advance to assist you in your retirement planning.
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 March 1, 1998 on an after-tax basis. This exclusion ratio is based on the total after-tax contributions that you made during employment, or from a pre-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 VSERS.
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 highest three consecutive fiscal year earnings or the average of your last 36 months, whichever is higher. Another component is the number of your years of creditable service at retirement or termination. Importantly, any years you worked in Group F or F* are subject to a 1.67% multiplier when calculating the retirement benefit. Any years worked in Group G are subject to a higher 2.5% multiplier.
For normal retirement, there is no reduction in benefits for age. If you have not reached your normal retirement age, but are 55 or over with a least five years of creditable service, you may qualify for a reduced early retirement benefit.
Assuming you have reached your normal retirement age with at least 5 years of Group G service, your annual benefit is calculated as follows:
Total Service (Group G service) x .025 x AFC
+
Total Service (Group F of F* service) x .0167 x AFC
For example, if your three highest consecutive years of salary were $39,000, $42,000, and $45,000, (the AFC would be $42,000) and you have 10 years service under Group G, your benefit would be calculated as:
10 x .025 x $42,000
equals
$10,500 annually or $875 a month
Note that age has no impact upon this retirement benefit because you have reached normal retirement eligibility. This is called the basic or the maximum benefit. It is paid in full for your life, or it may be reduced to provide a survivor benefit. By law, your maximum benefit cannot exceed a maximum of either 50 or 60% of your AFC, varying based on whether you were an employee prior to July 1, 2023, and any prior group membership.
Members on or before June 30, 2023 who opted into Group G:
- Group F to Group G – 50% of AFC for all years of service
- Group F* to Group G – 60% of AFC for all years of service
Members first joining the System on or after July 1, 2023
- Group G only – 50% of AFC
- Group G to F* - max of 50% of AFC for Group G years of service; 60% AFC can be reached using Group F* years of service
Spiking Law
"Average compensable hours" shall mean average annual compensable hours for a period of five full years immediately preceding the years used to determine average final compensation. If a member's compensable hours in any year used to calculate average final compensation exceeds 120 percent of average compensable hours, the compensation for hours worked in excess of 120 percent shall be excluded from average final compensation for that particular year. Average compensable hours form the benchmark to preclude abuses by implementing a 20-percent limit on increases in compensable hours in any year used to calculate average final compensation.
Early Retirement
If you are age 55 and have at least 5 years of service, you can take early retirement. Your benefit is calculated the same as a normal retirement benefit, but a reduction will be applied to your accrued benefit based on your years of service at retirement, whether you were an employee prior to July 1, 2023, and any prior group membership.:
Members on or before June 30, 2023 who opted into Group G:
- Group F to Group G – the reduction will be the lesser of one-half of one percent for each month equal to the difference between 240 months and the member’s months of creditable service, or the actuarial equivalent of a normal retirement allowance.
- Group F* to Group G – the reduction will be the lesser of five-ninths of one percent for each month equal to the difference between 240 months and the member’s months of creditable service, or the actuarial equivalent of a normal retirement allowance.
Members first joining the System on or after July 1, 2023
- Group G only – the reduction will be the actuarial equivalent of a normal retirement allowance.
Disability Retirement
If you are unable to perform your duties because of a disability that is likely to be permanent, you may apply for an ordinary disability retirement benefit if you have five years of service. If the disability is the result of a work-related injury, then there is no service requirement. Your disability benefit is calculated the same way as a normal benefit, except there is a minimum benefit payable of 25% of your AFC.
Please note that you must apply for a disability retirement benefit within 90 days after separation of service with the State of Vermont.
Vested Benefit
If you have 5 or more years of service and leave state 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 your normal retirement age, (or as early as age 55 with the possibility of a penalty being applied), and is calculated in the same way as a normal retirement benefit or early retirement depending on your age.
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.
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 accumulated contributions, or lifetime monthly payments if the beneficiary qualifies for such payments.
If you die as a member before termination or retirement and have 10 years of service or are age 55 with five years of service, a monthly benefit is payable to a dependent beneficiary only if you have designated one in writing to the Retirement Division. Stated otherwise, a beneficiary such as a surviving spouse is not immediately entitled to a monthly death benefit. To be entitled to this benefit, the beneficiary must be a dependent of yours at the time of death, and must have been designated by you in writing to the Retirement Division. If either of these conditions is not met, no monthly benefit is payable.
Amount of Survivor Benefit
The benefit payable to your designated dependent beneficiary is calculated as if you had retired on the date of death and had chosen 100% Survivorship. Your designated dependent beneficiary may choose to receive a refund of contributions in lieu of the survivor benefit.
Children's Benefit
If you are in service at date of death or on leave of absence for professional study with one or more years of creditable service, or if your death was the result of an accident while on a leave of absence, a pension equal to 10% of your AFC but not less than $50 a month will be payable to up to three dependent children under age 18 and to age 23 if the child is a full-time, unmarried, dependent student. Additional provisions are applicable to disabled children.
Other
If you 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.
Maximum Benefit
The basic or maximum benefit, is payable for your life with no benefit or refund of contributions at your death. If you make no election, your benefit will be paid as a Maximum benefit. At retirement you may choose to have a reduced benefit in order to provide continued income to your spouse or other beneficiary should you predecease them as outlined below.
Option 1 – Annuity Return Option
In a contributory system, there will always be accumulated member contributions in your account while you are working. These contributions fund a portion of your monthly retirement allowance (called the annuity portion or annuity payment), and they begin to deplete once you retire. By taking Option 1, the guaranteed annuity return, you receive a benefit slightly lower than the basic benefit, but the balance of your accumulated contributions at retirement, less the sum of annuity payments made to you, will be paid in a lump sum to your designated beneficiary upon your death. This option generally results in a payment to your beneficiary if you die within thirteen or fourteen years after retirement.
Option 2
Eliminated by Legislature on July 1, 2009.
Option 3 – 100% Survivorship Option
This option provides for your beneficiary to receive the same monthly allowance for life that you were receiving, should you predecease your designated beneficiary. The reduction for the 100% survivorship option from the basic benefit averages between 10% and 25%, depending upon the difference in your ages.
Option 3A – 100% Survivorship Pop-Up Option
The 100% pop-up option provides a benefit that is slightly lower than the straight survivorship option, but increases the payment to your basic benefit (maximum) should your beneficiary predecease you, or based on the stipulations contained in a domestic relations order.
Option 4 – 50% Survivorship Option
This option differs from the 100% survivorship in that your beneficiary receives 50% of the benefit that you were receiving should you predecease your designated beneficiary, therefore the reduction from the basic benefit is less. The reduction averages between 5% and 15% depending on the difference in your ages.
Option 4A – 50% Survivorship Pop-Up Option
As in the earlier pop-up option, this option provides lower initial payments to you and your beneficiary, but with an increased benefit should your beneficiary die first, or based on the stipulations contained in a domestic relations order.
Examples of Survivorship Options
Option Amount Payable to Retired Amount Payable to Beneficiary
Member (retired at age 65) (two years younger))
Basic Benefit $1,000 $0
100% Survivorship
Regular $807 $807
Pop-Up $788* $788
50% Survivorship
Regular $893 $446
Pop-Up $881* $440
*If beneficiary dies first, the member's benefit pops up to $1,000 in this case.
Level Income Option
At age 62, you will probably be eligible to receive a Social Security retirement benefit. Some members, however, retire before reaching age 62 and would like to increase their benefit through the Level Income Option.
Under this option, a member elects to receive a percentage of the member's estimated Social Security benefit from the Retirement System before Social Security actually begins, and then receives a reduced allowance from the System after age 62 when Social Security is received. The actual Social Security benefits you receive will not affect the Level Income Option after the initial calculations are made.
For example, suppose you have received an estimate from the Social Security Administration that your benefit at age 62, if you retire now, will be $600 monthly. Further suppose your retirement benefit from the System is $800 monthly. Under this option a percentage of the estimated Social Security benefit based upon your age (the younger you are, the smaller the percentage), is added to your retirement benefit. If you are age 59, for example, with the above $600 estimate from Social Security, $470 would be added to your retirement benefit and you would receive a total of $1,270 monthly from the System until you reach 62. At age 62, $600 would be subtracted from your monthly amount and you could receive $670 thereafter for the remainder of your lifetime.
The $600 from Social Security keeps your total income "level", so you will receive a total of $1,270 each month from the System and Social Security.
If you also elect a survivorship option, the survivor benefit is paid based on your benefit before adjustments for the Level Income Option. On an actuarial basis, the Level Income Option is cost neutral. It sometimes allows a member to retire when retirement would otherwise be impossible, but if the member lives far beyond age 62, the option may have been a poor choice since the reduction in benefit after age 62 will continue for as long as you live.
Cost-of-Living Adjustment (COLA)
A retired member may earn other income while they are receiving a retirement benefit, but they cannot work for the State of Vermont unless they are under contract or working as a temporary employee. (Retirement benefits for these two categories are excluded by law.) If they retire and return to work for the state as a classified or exempt employee, their retirement benefit will be frozen.
They will begin contributing on a new account, entirely separate from their initial retirement benefit. (A member may, however, begin active membership in VMERS or VSTRS and continue to receive their pension in VSERS.)
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 of any changes that must be made to your pension check. You may make certain tax and direct deposit changes on our member portal. Please visit www.vermonttreasurer.gov/content/member-direct to find out how to securely sign up. 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.
Other Retirement and Survivorship Benefits
Health Insurance After Retirement
You may continue health insurance coverage into retirement. The amount the State pays toward your medical coverage is based on your years of service at retirement, as reflected in the chart below:
You must be a covered employee at retirement in order to carry whatever coverage is in effect at that time into retirement.
There will be a double deduction for the medical 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.
*To avoid possible issues during the transition from active employee health insurance to retiree health insurance, we strongly recommend filling any prescriptions before the end of the month in which you stop working.
If you elect to drop the coverage for yourself or your dependent(s) at any time after retirement, you will not be able to begin health insurance coverage again at a later date.
After you have retired and reached age 65, Medicare coverage is mandatory and the cost is shared with the plan, so the plan premium drops; Medicare becomes the primary insurer. You must remember to enroll for both Part A and Part B of Medicare as soon as eligible. You do not need to enroll in Part D of Medicare as Express Scripts provides additional coverage that "wraps" around the standard plan, which is better than a Medicare Part D plan.
It is important to recognize that if you have two-person or family coverage, that coverage ceases at your death, unless you have chosen a survivorship option to allow for the monthly premium deduction from the beneficiary's retirement check. In this instance, the surviving beneficiary may continue coverage in the group plan, but must pay the full premium cost of the health insurance. Premium Reduction Option (PRO) gives members the option at retirement of paying a higher premium in order to provide a partial premium for their surviving dependent, if they elect a survivorship option at retirement.
Dental Insurance
At the date of retirement, members are given a one time option to choose Dental Insurance at the full premium cost to the member provided they have the state dental coverage at retirement. The state does 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.
View chart showing levels of coverage performed by dentists who participate in the Delta Dental Premier network.
Life Insurance
If you are covered by life insurance and have at least 20 years of creditable service and retire with no break between termination and retirement, you are covered by a $10,000 life insurance policy at no cost. In addition, you may convert your present insurance coverage to an individual policy without a physical examination.
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.
Single Deposit Investment Account (SDIA)
The single deposit investment account was another option that was available to members to increase their income at retirement by allowing contributions to be deposited into a tax-sheltered account upon transfer from the non-contributory system established in 1981. SDIA money is available for withdrawal upon termination of employment or retirement, but a penalty will be applied for withdrawals from the taxable portion prior to age 59 ½, unless retirement occurs after age 55. Please contact Prudential Retirement for distribution information.
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 account is payable upon termination of employment or retirement, regardless of your age. Additional detailed information about the Deferred Compensation plan may be found at the Prudential Website (the deferred compensation third-party administrator for the State of Vermont) or through this web site at Deferred Compensation.
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.
