COH Pension Systems Retirement Benefit Levels COH Pension
COH Pension Systems Retirement Benefit Levels
COH Pension Systems Retirement Benefit Levels Replacement Ratio: - Standard measure of retirement benefit level - Retirement income as % of pre-retirement income 1
HMEPS Civilian Employees Replacement Ratio w/o DROP Years of Service at Retirement Employees Hired Prior to 1/1/08 – Plan A Employees Hired After 1/1/08 Current Ultimate* 20 63%+SS 50%+SS 36%+SS 25 85%+SS 66%+SS 45%+SS 30 90%+SS 83%+SS 50%+SS ----------------------------------------------------------EE Contribution % of Salary 5%+6. 2% 0%+6. 2% Eligible for Full Benefit Age+Svc=75 Age 62/5 Svc OT Included in Benefit Calculation No No DROP Available Yes No Automatic COLA Yes No * All Service After 1/1/05 2
HPOPS and HFRRF Public Safety Employees Replacement Ratio w/o DROP Years of Service at Retirement HPOPS HFRRF Current Future** 20 55% 45% 50% ? 25 65% 55% 65% ? 30 75% 65% 80% ? --------------------------------------------------------------EE Contribution % of Salary 9% 10. 25% 9% ? Eligible for Full Benefit 20 Yrs Svc Age 55/10 Svc 20 Yrs Svc ? OT Included in Benefit Calculation No No Yes ? DROP Available Yes No Yes ? Automatic COLA Yes Yes ? * Applies to police officers hired after October 9, 2004 ** Work in process 3
DROP Is A Game Changer v Specific to Individual – cannot generalize v Variables Include: § Provisions of DROP § Age and service at DROP entry and exit § Basic benefit accrual rates w/o DROP § Salary changes during DROP § EE Contributions during DROP § Interest credits on DROP account 4
Sample of DROP Changing the Game At DROP Entry: v Age 45 v 20 years of service v Annual Salary $75, 000 v Eligible for lifetime annuity of $37, 500 (50%) per year 5
Sample of DROP Changing the Game (cont’d) During DROP: v Active, but no further benefit accruals based on salary and service v Salary increases 3% per year v DROP account credited each year with: § Annuity amount based on salary and service at 20 yrs § EE contributions of 9% of salary § Interest at 5% per yr 6
Sample of Drop Changing The Game (cont’d) At Retirement: v Age 55 v 30 years of service v Annual salary of $100, 794 v Accumulated value of DROP account - $627, 655 v COLA adjusted 20 year service annuity - $45, 000/yr 7
Sample of Drop Changing the Game (cont’d) § Pre-Retirement Salary § Annuity Value ‾ From DROP account ‾ Based on salary/service ‾ Total § Replacement Ratio with DROP w/o DROP $100, 794 $ 44, 832 $ N/A 45, 000 80, 634 $ 89, 832 $ 80, 634 89% 80% 8
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