Podcast
Questions and Answers
What was the contribution requirement for employees in the FRS Pension Plan before July 2011?
What was the contribution requirement for employees in the FRS Pension Plan before July 2011?
What is the current contribution requirement for employees in the FRS plan after July 2011?
What is the current contribution requirement for employees in the FRS plan after July 2011?
What does 'AFC' stand for in the context of FRS Pension Plan?
What does 'AFC' stand for in the context of FRS Pension Plan?
Average Final Compensation
The formula to calculate the annual pension plan benefit is Years of Service x Average Final Compensation x ______.
The formula to calculate the annual pension plan benefit is Years of Service x Average Final Compensation x ______.
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How many years of service are required for vesting in the FRS Pension Plan for new hires from July 1, 2001 through June 30, 2011?
How many years of service are required for vesting in the FRS Pension Plan for new hires from July 1, 2001 through June 30, 2011?
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In the context of the FRS Pension Plan, what does the Class Multiplier (CM) represent for a Regular Class member?
In the context of the FRS Pension Plan, what does the Class Multiplier (CM) represent for a Regular Class member?
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What is the impact of working at least one day within a month for FRS employees?
What is the impact of working at least one day within a month for FRS employees?
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Employees who left FRS employment in 1999 with 4 years of service need 2 more years to fully vest.
Employees who left FRS employment in 1999 with 4 years of service need 2 more years to fully vest.
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What must members not actively working in a position covered by the FRS on July 1, 2001, do to vest?
What must members not actively working in a position covered by the FRS on July 1, 2001, do to vest?
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Study Notes
FRS Pension Plan Overview
- Pre-July 2011: Employees did not contribute; all contributions made by employers.
- Post-July 2011: Employees must contribute 3% of pre-tax pay; contributions are automatic from day one and cannot be altered.
Pension Plan Characteristics
- Defined Benefit Plan: Guarantees a monthly retirement check based on a formula.
- Contributions by both employees and employers do not dictate final benefit value.
Retirement Benefit Formula
- Annual Pension Benefit = Years of Service (YOS) x Average Final Compensation (AFC) x Class Multiplier (CM).
Years of Service (YOS)
- Service credit is earned by working at least one day within the month.
- Accrual only counts for time with FRS participating employers; more years equate to higher benefits.
Average Final Compensation (AFC)
- Calculated based on the average annual salary over a specific fiscal year (July to June).
- AFC remains consistent despite membership in multiple classes.
AFC Calculation Differences
- Hired before July 1, 2011: AFC is calculated from the highest five years of salary.
- Hired on or after July 1, 2011: AFC is based on the highest eight years of salary.
Class Multiplier (CM)
- Determines benefit rates based on membership class:
- Regular Class (most common, teachers): 1.6%
- Special Risk (police, fire, EMT, corrections): 3.0%
- Senior Management: 2.0%
- Elected Officials: 3.33% for judges, 3.0% for other officials.
- Members may have Dual/Mixed Service with varying classes.
Vesting Requirements
- Vesting: Minimum years of service needed to qualify for retirement benefits.
- Pre-July 1, 2001: 10 years of service required.
- July 1, 2001 - June 30, 2011: 6 years of creditable service required for vesting.
- New hires during this period subject to 6-year requirement, and current employees "grandfathered" into pre-existing rules.
Impact of Prior Service on Vesting
- Members not actively working as of July 1, 2001, must return to covered employment for up to one year to vest with fewer years than previously required.
Examples of Vesting Needs
- Member with 4 years of service (left in 1999): needs 2 more years to vest.
- Member with 7 years of service: needs 1 year to vest.
- Member with 9.5 years of service: needs only 0.5 year to vest; cannot be required to work more than originally needed.
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Description
Test your knowledge on the FRS Pension Plan with these flashcards. Learn the key differences between pre-July 2011 and post-July 2011 contributions and definitions. This quiz is perfect for employees wanting to understand their pension benefits.
