retirement benefits available to you

Types of Benefits and Calculations

 

Standard Retirement Benefit and Calculation

Early Retirement Benefit and Calculation

Disability Benefit and Calculation

Active Member Death Benefit and Calculation

 

Standard Retirement Benefit

Your eligibility for a standard retirement benefit depends on your age and the amount of creditable service you have acquired. In order to receive a standard retirement (lifetime monthly) benefit, you must meet the following qualification based on the plan appropriate for you:

Plan B (Members retiring on or after June 30, 1999 and hired prior to January 1, 2014)

  1. You must be vested (contributed to KCPSRS for at least five (5) years).
  2. You must be 60 years old; or you must have at least 75 credits, with each year of creditable service (prorated for fractional years) equal to one credit, and each year of age (prorated for fractional years) equal to one credit.
  3. You must have terminated employment with any KCPSRS participating employer.

Plan C (Members hired after January 1, 2014)

  1. You must be vested (contributed to KCPSRS for at least five (5) years).
  2. You must be 62 years old; or you must have at least 80 credits, with each year of creditable service (prorated for fractional years) equal to one credit, and each year of age (prorated for fractional years) equal to one credit.
  3. You must have terminated employment with any KCPSRS participating employer.

If you are eligible for a standard retirement benefit, you may choose one of the four payment options (Basic, Option 1, Option 2, or Option 3).

Basic Benefit

Provides a monthly retirement benefit amount based on the standard retirement benefit calculation. This benefit is payable for as long as you live. If you should die before you have received retirement payments totaling the amount of your contributions to the plan, then your beneficiary will receive a lump sum payment of the remainder of your contributions and interest.

Option 1 (Survivor 100%)

Provides a reduced monthly retirement benefit to you as long as you live, plus, upon your death, the same benefit amount for your survivor for the remainder of your survivor’s life. If your survivor dies before you do, then your retirement benefit will be increased, at that time, to the amount payable to you under the Basic Benefit formula. After the death of both you and your survivor, no further benefits are payable.

Option 2 (Survivor 50%)

Provides a reduced monthly retirement benefit to you as long as you live, plus, upon your death, a benefit for your survivor equal to half (50%) of your benefit amount. If your survivor dies before you, your monthly benefit is increased at that time to the amount payable under the Basic Benefit formula. After the death of both you and your survivor no further benefits will be paid.

Option 3

Provides a slightly higher benefit amount than the Basic Benefit but it eliminates the payment of the remainder benefit to your estate or to your survivor that is offered with the Basic Benefit.

IMPORTANT: If you elect Option 1 or 2, your survivor selection is irrevocable for life once you receive your first retirement check.

Standard Retirement Benefit Calculations

Definitions

Average Final Compensation (AFC): The highest average annual compensation received based on contributions paid, for any four consecutive years of contributable service.

Years of Creditable Service (YCS): The amount of time a regular employee is a member of the retirement system and makes contributions to the system and prorated for partial years worked.

The standard retirement benefit calculation uses your Average Final Compensation (AFC) times a multiplier specific to your plan times the Years of Creditable Service (YCS) subject to a maximum limit. Dividing the annual retirement benefit by 12 gives you the monthly benefit amount.

Plan B: (Members retiring on or after June 30, 1999 and hired prior to January 1, 2014)

(AFC x 2% x YCS)/12 = Monthly benefit

Plan C: (Members hired on or after January 1, 2014)

(AFC x 1.75% x YCS)/12 = Monthly benefit

EXAMPLE: Pat Smith, hired prior to January 1, 2014, retires from the School District on June 1, 2016 after working 15.5 years. Pat’s highest average annual compensation for four consecutive years is $22,500. If he were 60 years old the calculation of Pat’s monthly benefit would be: ($22,500 x .02 x 15.5)/12 = $581.25 monthly benefit

Maximum Retirement Allowance

KCPSRS is designed for retirees to receive up to 60% of their Average Final Compensation with 30 years of service, therefore the maximum years of creditable service used in benefit calculations is 30 years.

 

Early Retirement Benefit

You can choose to receive an early retirement (reduced amount) once you become vested and attain the age of 55. The monthly benefit will be reduced based on the number of months you lack meeting the full retirement requirement of being at least age 60 under Plan B and age 62 under Plan C.

Early Retirement Benefit Calculations

The early retirement benefit calculation reduces the standard retirement benefit by an actuarially determined rate based on the number of months prior to normal retirement age a member elects to receive a benefit.

Example: If Pat Smith is 57 years and 7 months old when he decides to retire. His standard retirement benefit of $581.25 is reduced to $464.77 because he is taking an early retirement benefit. ($581.25 x the actuarial reduction rate for his age, 0.79961 = $464.77)

Similar to standard retirement, early retirees may choose the Basic Benefit, Option 1, Option 2, or Option 3.

 

Disability Benefit

You may be eligible to receive a disability retirement allowance if the following requirements are met:

  1. You are vested.
  2. You are unable to perform your employment duties.
  3. This incapacity is likely to be permanent.
  4. The disability is certified by the Retirement System’s Medical Board and approved by the Board of Trustees.
  5. You will be subject to periodic re-evaluation of your disability.
  6. You will be required to submit copies of your income tax forms and evidence of any social security payments and/or disability payments, if any, until you reach the minimum standard retirement age.

Annual application for benefits may be made after you cease to be an active member, provided the disability commenced while you were an active member and provided that the application is made no later than six months after you ceased to be an employee of one of the Retirement System’s employers covered under this plan.

Disability Benefit Calculations

Your disability benefit is calculated in the same way that your standard retirement benefit is determined; however, you are deemed to have reached retirement age at the time you qualify for disability benefits.

Example: Pat Smith becomes disabled at age 38 after working at the Library for 15 years. His average annual compensation is $22,500. Even though he is several years less than normal retirement age, Pat is deemed to be eligible for full retirement. The calculation of Pat’s benefit would be:

Plan B: (Members retiring on or after June 30, 1999 and hired prior to January 1, 2014) 

($22,500 x 15 x .02)/12 = $562.50 Monthly benefit

Plan C: (Members hired on or after January 1, 2014) 

($22,500 x 15 x .0175)/12 = $492.19 Monthly benefit

Minimum Disability Allowance

The minimum disability allowance is 25% of your average final compensation, or a benefit calculated assuming you worked to age 60—whichever is smaller. Contact the Retirement Office to find out how these provisions might apply to your situation.

Your disability benefit will be subject to periodic medical exams and income reporting. If you resume any kind of work, your disability retirement may be adjusted. If that situation arises, call the Retirement Office.

Similar to standard retirement, disability retirees may choose the Basic Benefit, Option 1, Option 2, or Option 3.

 

Active Member Death Benefit

If you die before taking a retirement pension, and your primary beneficiary for the plan is a surviving spouse, a dependent child under age 19, or a dependent parent, the primary beneficiary is entitled to receive a monthly retirement allowance if:

  1. You were an active Member of the Plan at the time of your death;
  2. You were an inactive vested Member and you met the age and service requirements for either a regular or an early retirement benefit.

In any other circumstance, your beneficiary (or beneficiaries) is (are) entitled to receive your contribution amount and any interest accumulated as a lump sum payout at your death.

KCPSRS is required by law to pay the beneficiary listed on your membership record. Always notify the Retirement Office when you have a change that requires a new beneficiary designation.

Active Member Death Benefit Calculations

The death benefit is calculated using the standard retirement benefit calculation, and your date of death as the date of retirement. Your age, at the time of your death, and the age of your beneficiary will affect the amount of the Death Benefit.

The years of creditable service will be the greater of ten or your actual years of service.

Your primary beneficiary will receive the 100% survivor benefit known as “Option 1” (see Types of Benefits – Standard Retirement Benefit).

If your primary beneficiary is a dependent child the benefit will terminate when the child attains age nineteen.

Active member death benefits are not the same as the survivor option of a retirement or disability retirement benefit. The primary beneficiary must be the member’s wife, dependent parent, or dependent child.

 

Please contact the Retirement Office with questions.