Вы находитесь на странице: 1из 4

Volume 1 Number 1

Retiring Times State Employees Spring 2001

Message from Vermont State Treasurer James Douglas

You are probably aware that this past year has five years, the average annual return has been
been quite a roller coaster ride in the financial 13%, which is a full 1% per year above the
markets. I would like to take this opportunity benchmark. At year’s end, total assets in the
The Newsletter of the Vermont State Employees’ Retirement System

to put your mind at rest about the integrity of fund were $1.02 billion. During the past fiscal
your pension system. year the fund distributed just over $35 million
in benefit payments. Thus, the uncertainty in
The pension fund is diversified over several the capital markets is not affecting the security
different asset classes, such as stocks, bonds of pension benefits for State employees.
and real estate. These asset classes behave
very differently from one another. Thus, some The funding level of your pension system has
asset classes will grow rapidly in value while improved steadily over the past five years. I’m
others are sluggish or even going down. Over- pleased that the general assembly has contrib-
all, however, the total value of the pension uted the full amount recommended by the ac-
fund increases almost every year, exactly what tuary and the Board of Trustees for three years
we hope to achieve through diversification. running.

Diversification really does work. Despite the As you may know, legislation has been intro-
market volatility, your pension fund has per- duced to provide more choice among pension
formed well over time, even though the return benefits. The bill provides for an optional de-
for 2000 was -1%. However, that was nearly fined contribution (DC) plan for all employees
3% higher than the fund’s benchmark at –4%. to be available in January 2003. Currently,
The benchmark is the expected return if the only exempt state employees and some mu-
funds were not managed by professionals, but nicipal employees have this option. The DC
rather simply invested passively in index funds plan is a 401(a) plan, which is very similar to
that track the overall markets. Over the past (continued on page 2)

Message from Retirement Operations Director Cynthia L.

I am pleased to report that this newsletter tems administered by our office. In his capac-
represents the first in our continuing series of ity as Editor, Joe will be bringing you news of
quarterly newsletters that will be used to bring current activity relating to the VSERS, as well
timely and useful information to you regarding as important on-going education on the vari-
the Vermont State Employees’ Retirement ous benefits available through your retirement
System (VSERS). plan. We hope to feature one to two specific
benefit provisions each quarter and provide
Regular quarterly newsletters are now possible you with an in-depth explanation of how the
due to the creation of a new position within the benefit works and what it might mean to you
State Treasurer’s Office. I would like to wel- as a VSERS member. We also intend to in-
come Joe Bahr, our new Information and Edu- clude a Question and Answer section as space
cation Specialist who, among multiple other permits where we will provide short,
tasks, will be responsible for producing quar-
terly newsletters for all three retirement sys- (continued on page 3)

Douglas’s Message (continued from page 1) I encourage every state employee to take advan-
tage of our Deferred Compensation program. It
either a 401(k) or 403(b) plan, to which both the
affords an opportunity to save additional re-
employer and the employee contribute. Those
sources for retirement on a tax-deferred basis.
state employees who choose DC would control
I’m delighted that nearly half of all state employ-
their own pension assets and thus have more re-
ees participate. If you’re not among them, I urge
sponsibility for their retirement. A DC plan is
you to consider it.
also portable – if you leave your job, your retire-
ment assets can continue to grow in a qualified
The Treasurer’s Office will keep you posted on
investment plan. When you retire, these assets
new developments with your retirement plan,
are yours.
legislation and other matters of interest. Re-
member, we are here to help. You are always
In addition, legislation is pending to provide a
welcome to get in touch with us if we can be of
stipend for Korean and World War II veterans
any assistance.
who were ineligible for a grant of service credit
prior to retirement. Other legislation will ad-
dress the issue of which categories of employees James H. Douglas
are properly assigned to the various plans within State Treasurer
the system.

New “Air Time” Option for Earlier Retirement

Want to retire early? Then recent changes in can combine state government employment
the retirement program will interest you. Last with the purchase of other types of service to
Retirement Board of year, the Legislature ap- obtain this 25-year plateau.
Trustees proved the purchase of
Chair: Roger Dumas up to five years of “air Among the types of service that are eligible for
time” for anyone who purchase are military service, the Peace Corps,
Members: had 25 or more years of VISTA, State or municipal employment, or
Sean Campbell
James Douglas retirement credits. The teaching at any school. This includes time from
Patricia McDonald purchase of these years a prior Vermont State Employees’ Retirement
Warren Whitney
Jane Osgatharp would allow a state em- System membership.
Catherine Simpson, Alter- ployee to receive a nor-
mal retirement with 30 Two restrictions apply to this time. First, no
years of service, regard- individual can purchase more than 10 years of
Director of Retirement less of his or her actual non-military service plus five years of military
Systems: age. service. Second, you cannot purchase time for
Cynthia Webster any previous employment that has benefits from
133 State Street
Montpelier Here is how “air time” another retirement system.
Vermont 05633-6901 works. First, you must
828-2305 or 1-800-642-
3191 (In-State) have at least 25 years to- If any of these combinations of employment and
wards retirement before service purchases give you 25 years of credit-
you can purchase any able time in the retirement system, then you can
Retiring Times is pub- “air time.” You can earn buy “air time.” For “air time,” you don’t need
lished quarterly by the these 25 years by work- any particular type of employment or service.
Vermont State Employ-
ees’ Retirement System. ing as a state employee The cost of “air time” depends upon your age
Editor: Joseph Bahr in Vermont for that and annual salary. For this calculation, annual
length of time. Or you
(continued on page 4)

Webster’s Message (continued from page 1)
plain-English responses to frequently asked
questions. I would like to encourage you to write e-mail: jbahr@tre.state.vt.us
to Joe and let him know what type of articles or
specific questions you would like addressed in Our goal is to make this newsletter as helpful
future newsletters. He may be reached at the fol- and educational as possible for you, our valued
lowing: members.
Joe Bahr
Information and Education Specialist Cynthia L. Webster
Vermont State Treasurer’s Office Director of Retirement Operations
133 State Street
Montpelier, Vermont 05633

Military Service Survey Results

Every member was mailed a survey on law should be considered.
his or her military history in November. The study resulted in four recommenda-
The results have now been tallied. tions from the State Treasurer’s Office to
These results include the State Employ- the Vermont Legislature. First, Vermont
ees’, Teachers’, and Municipal Em- law should be amended to permit individu-
ployees’ retirement systems. als who served in the guards or reserves to
earn credit towards both a military and ci-
Among active members, 577 people returned vilian government pension for their military ser-
surveys. They had a total of 3,358 years of mili- vice.
tary service, including the national guard and re-
serves. Just over half of those years either are or Second, Vermont should provide a one-time sti-
could potentially go toward earning a military pend to beneficiaries of the State Employees’
pension. Under current Vermont law, these and Teachers’ Retirement System who served in
years of military service cannot be used for a ci- the military and met the legal eligibility criteria,
vilian government pension if they are already but were unable to obtain credit prior to retire-
being used for a military pension. ment.

Among retired members, 1,123 people returned Third, Vermont should give credit towards re-
surveys. They had a total of 5,498 years of mili- tirement for all periods of absence to serve in the
tary service, including guards and reserves. Just military – regardless of when served – if the in-
under half of all the years that were reported ei- dividual returns to work within a specified pe-
ther are or could potentially go toward earning a riod of time after military service.
military pension, and thus under Vermont law
cannot be used for a civilian government pen- Fourth, Vermont should give members of the
sion. Municipal Employees’ Retirement System an
option to purchase military service comparable
The survey was one part of a comprehensive to the existing provisions for State employees
study by the Vermont State Treasurer’s Office and teachers, provided the option is cost-neutral
on credit for military service in the retirement to the retirement system. (“Cost neutral” means
system. This study was mandated by the 2000 that the price of purchasing the military service
Legislature to determine how much military ser-
vice is being used for retirement credit in Ver- credit would – with interest and other gains in
mont, how that compares with the rest of the value – be able to pay for the increased pension
country, and whether any adjustments to current benefit to the member.)

Air Time (continued from page 2) price – with interest and other earnings – must
cover the full cost of the additional pension
salary is the full-time equivalent of your income. benefit that you will receive for early retirement.
Thus, if you work half time, you would double
your pay as a state employee to get the full-time The interest and other earnings make a huge dif-
equivalent. Two examples will give you the ference in your purchase price. For example,
general idea. you may buy five years of “air time” for
$30,000. But if you receive $10,000 annually
If your age is 50 and you have an annual salary from your pension, then you will be paid
of $40,000, then a single year of “air time” $50,000 for the additional five years of retire-
would cost about $6,600. The approximate cost ment. The $20,000 difference between what you
of five years of “air time” would be $33,000. pay and what you receive in additional retire-
(To obtain the exact cost, you would have to ment benefits is the additional earnings on your
speak with the retirement office.) purchase price.

However, if your age is 45 and you have an an- Early retirement is not for everyone. The people
nual salary of $40,000, then a single year of “air who take it will usually start a new career in a
time” would be only $5,850. Five years would different occupation. The option, however, is
cost only $29,250. To purchase five years of one more benefit of your retirement plan.
“air time,” this younger individual would pay
almost $4,000 less. (For more information on “air time,” please con-
tact the retirement office.)
The difference in the purchase price for “air
time” is determined by actuarial estimates of the
cost to the retirement system. Your purchase

Vermont State Employees’ Retirement System PRSRT STD

133 State Street U. S. Postage
Montpelier, VT 05633-6901 PAID
Burlington, VT
Permit No. 601