Pennsylvania Pension System Reform Benefit Examples - PowerPoint PPT Presentation

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Pennsylvania Pension System Reform Benefit Examples

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  1. Pennsylvania Pension System Reform Benefit Examples

  2. Example of Changes to Current Employee SERS member with 25 years of service as of effective date of change retires at age 60 with 30 years of total service • Final average salary equals $50,000 under current plan • Final average salary equals $47,000 with reforms • Current Benefit equals 2.5% x $50,000 x 30 = $37,500 Proposed Benefit equals • 2.5% x $50,000 x 25 = $31,250 plus • 2.0% x $47,000 x 5 = $4,700 for total of $35,950

  3. Example of Changes to Current Employee SERS member with 25 years of service as of effective date of change retires at age 60 with 30 years of total service • Contribution balance at retirement is $80,000 • Contribution balance at effective date is $54,000 and accrues to $65,700 at retirement • $65,700 attributable to service prior to the effective date • $14,300 attributable to service after the effective date

  4. Example of Changes to Current Employee SERS member with 25 years of service as of effective date of change retires at age 60 with 30 years of total service • Current Actuarial Equivalent offset • Subsidized Portion: $80,000/14.29 = $5,600 • Net Annuity: $37,500 - $5,600 = $31,900 • Proposed Actuarial Equivalent offset • Subsidized Portion: $65,700/14.29 = $4,600 • Equivalent Portion: $14,300/10.42 = $1,400 for total $6,000 • Net Annuity: $35,950 - $6,000 = $29,950 • Lump sum amount of $80,000 is unchanged

  5. Example of Changes to Current Employee SERS member with 20 years of service as of effective date of change retires at age 60 with 30 years of total service • Final average salary equals $50,000 under current plan • Final average salary equals $47,000 with reforms • Current Benefit equals 2.5% x $50,000 x 30 = $37,500 Proposed Benefit equals • 2.5% x $50,000 x 20 = $25,000 plus • 2.0% x $47,000 x 10 = $9,400 for total of $34,400


  6. Example of Changes to Current Employee SERS member with 20 years of service as of effective date of change retires at age 60 with 30 years of total service • Contribution balance at retirement is $80,000 • Contribution balance at effective date is $34,000 and accrues to $50,000 at retirement • $50,000 attributable to service prior to the effective date • $30,000 attributable to service after the effective date

  7. Example of Changes to Current Employee SERS member with 20 years of service as of effective date of change retires at age 60 with 30 years of total service • Current Actuarial Equivalent offset • Subsidized Portion: $80,000/14.29 = $5,600 • Net Annuity: $37,500 - $5,600 = $31,900 • Proposed Actuarial Equivalent offset • Subsidized Portion: $50,000/14.29 = $3,500 • Equivalent Portion: $30,000/10.42 = $2,900 for total $6,400 • Net Annuity: $34,400 - $6,400 = $28,000 • Lump sum amount of $80,000 is unchanged

  8. Example of Changes to Current Employee SERS member with 10 years of service as of effective date of change retires at age 60 with 30 years of total service • Final average salary equals $50,000 under current plan • Final average salary equals $47,000 with reforms • Current Benefit equals 2.5% x $50,000 x 30 = $37,500 Proposed Benefit equals • 2.5% x $50,000 x 10 = $12,500 plus • 2.0% x $47,000 x 20 = $18,800 for total of $31,300

  9. Example of Changes to Current Employee SERS member with 10 years of service as of effective date of change retires at age 60 with 30 years of total service • Contribution balance at retirement is $80,000 • Contribution balance at effective date is $10,000 and accrues to $22,000 at retirement • $22,000 attributable to service prior to the effective date • $58,000 attributable to service after the effective date

  10. Example of Changes to Current Employee SERS member with 10 years of service as of effective date of change retires at age 60 with 30 years of total service • Current Actuarial Equivalent offset • Subsidized Portion: $80,000/14.29 = $5,600 • Net Annuity: $37,500 - $5,600 = $31,900 • Proposed Actuarial Equivalent offset • Subsidized Portion: $22,000/14.29 = $1,500 • Equivalent Portion: $58,000/10.42 = $5,600 for total $7,100 • Net Annuity: $31,300 - $7,100 = $24,200 • Lump sum amount of $80,000 is unchanged

  11. Example of Changes to Current Employee SERS member with 5 years of service as of effective date of change retires at age 60 with 30 years of total service • Final average salary equals $50,000 under current plan • Final average salary equals $47,000 with reforms • Current Benefit equals 2.5% x $50,000 x 30 = $37,500 Proposed Benefit equals • 2.5% x $50,000 x 5 = $6,250 plus • 2.0% x $47,000 x 25 = $23,500 for total of $29,750

  12. Example of Changes to Current Employee SERS member with 5 years of service as of effective date of change retires at age 60 with 30 years of total service • Contribution balance at retirement is $80,000 • Contribution balance at effective date is $3,800 and accrues to $10,000 at retirement • $10,000 attributable to service prior to the effective date • $70,000 attributable to service after the effective date

  13. Example of Changes to Current Employee SERS member with 5 years of service as of effective date of change retires at age 60 with 30 years of total service • Current Actuarial Equivalent offset • Subsidized Portion: $80,000/14.29 = $5,600 • Net Annuity: $37,500 - $5,600 = $31,900 • Proposed Actuarial Equivalent offset • Subsidized Portion: $10,000/14.29 = $700 • Equivalent Portion: $70,000/10.42 = $6,700 for total $7,400 • Net Annuity: $29,750 - $7,400 = $22,350 • Lump sum amount of $80,000 is unchanged

  14. Example of Changes to Current Employee PSERS member with 25 years of service as of effective date of change retires at age 60 with 30 years of total service • Final average salary equals $75,000 under current plan • Final average salary equals $72,000 with reforms • Current Benefit equals 2.5% x $75,000 x 30 = $56,250 Proposed Benefit equals • 2.5% x $75,000 x 25 = $46,875 plus • 2.0% x $72,000 x 5 = $7,200 for total of $54,075

  15. Example of Changes to Current Employee PSERS member with 25 years of service as of effective date of change retires at age 60 with 30 years of total service • Contribution balance at retirement is $160,000 • Contribution balance at effective date is $108,000 and accrues to $131,000 at retirement • $131,000 attributable to service prior to the effective date • $29,000 attributable to service after the effective date

  16. Example of Changes to Current Employee PSERS member with 25 years of service as of effective date of change retires at age 60 with 30 years of total service • Current Actuarial Equivalent offset • Subsidized Portion: $160,000/15.67 = $10,200 • Net Annuity: $56,250 - $10,200 = $46,050 • Proposed Actuarial Equivalent offset • Subsidized Portion: $131,000/15.67 = $8,400 • Equivalent Portion: $29,000/11.13 = $2,600 for total $11,000 • Net Annuity: $54,075 - $11,000 = $43,075 • Lump sum amount of $160,000 is unchanged

  17. Example of Changes to Current Employee PSERS member with 20 years of service as of effective date of change retires at age 60 with 30 years of total service • Final average salary equals $75,000 under current plan • Final average salary equals $72,000 with reforms • Current Benefit equals 2.5% x $75,000 x 30 = $56,250 Proposed Benefit equals • 2.5% x $75,000 x 20 = $37,500 plus • 2.0% x $72,000 x 10 = $14,400 for total of $51,900

  18. Example of Changes to Current Employee PSERS member with 20 years of service as of effective date of change retires at age 60 with 30 years of total service • Contribution balance at retirement is $160,000 • Contribution balance at effective date is $69,000 and accrues to $102,000 at retirement • $102,000 attributable to service prior to the effective date • $58,000 attributable to service after the effective date

  19. Example of Changes to Current Employee PSERS member with 20 years of service as of effective date of change retires at age 60 with 30 years of total service • Current Actuarial Equivalent offset • Subsidized Portion: $160,000/15.67 = $10,200 • Net Annuity: $56,250 - $10,200 = $46,050 • Proposed Actuarial Equivalent offset • Subsidized Portion: $102,000/15.67 = $6,500 • Equivalent Portion: $58,000/11.13 = $5,200 for total $11,700 • Net Annuity: $51,900 - $11,700 = $40,200 • Lump sum amount of $160,000 is unchanged

  20. Example of Changes to Current Employee PSERS member with 10 years of service as of effective date of change retires at age 60 with 30 years of total service • Final average salary equals $75,000 under current plan • Final average salary equals $72,000 with reforms • Current Benefit equals 2.5% x $75,000 x 30 = $56,250 Proposed Benefit equals • 2.5% x $75,000 x 10 = $18,750 plus • 2.0% x $72,000 x 20 = $28,800 for total of $47,550

  21. Example of Changes to Current Employee PSERS member with 10 years of service as of effective date of change retires at age 60 with 30 years of total service • Contribution balance at retirement is $160,000 • Contribution balance at effective date is $21,000 and accrues to $46,000 at retirement • $46,000 attributable to service prior to the effective date • $114,000 attributable to service after the effective date

  22. Example of Changes to Current Employee PSERS member with 10 years of service as of effective date of change retires at age 60 with 30 years of total service • Current Actuarial Equivalent offset • Subsidized Portion: $160,000/15.67 = $10,200 • Net Annuity: $56,250 - $10,200 = $46,050 • Proposed Actuarial Equivalent offset • Subsidized Portion: $46,000/15.67 = $2,900 • Equivalent Portion: $114,000/11.13 = $10,300 for total $13,200 • Net Annuity: $47,550 - $13,200 = $34,350 • Lump sum amount of $160,000 is unchanged

  23. Example of Changes to Current Employee PSERS member with 5 years of service as of effective date of change retires at age 60 with 30 years of total service • Final average salary equals $75,000 under current plan • Final average salary equals $72,000 with reforms • Current Benefit equals 2.5% x $75,000 x 30 = $56,250 Proposed Benefit equals • 2.5% x $75,000 x 5 = $9,375 plus • 2.0% x $72,000 x 25 = $36,000 for total of $45,375

  24. Example of Changes to Current Employee PSERS member with 5 years of service as of effective date of change retires at age 60 with 30 years of total service • Contribution balance at retirement is $160,000 • Contribution balance at effective date is $8,000 and accrues to $21,000 at retirement • $21,000 attributable to service prior to the effective date • $139,000 attributable to service after the effective date

  25. Example of Changes to Current Employee PSERS member with 5 years of service as of effective date of change retires at age 60 with 30 years of total service • Current Actuarial Equivalent offset • Subsidized Portion: $160,000/15.67 = $10,200 • Net Annuity: $56,250 - $10,200 = $46,050 • Proposed Actuarial Equivalent offset • Subsidized Portion: $21,000/15.67 = $1,300 • Equivalent Portion: $139,000/11.13 = $12,500 for total $13,800 • Net Annuity: $45,375 - $13,800 = $31,575 • Lump sum amount of $160,000 is unchanged