KPERS Retirement Benefit Changes

Overview

In April 2007, the Kansas Legislature passed and the Governor signed into law a new retirement plan, changing benefits for future KPERS employees. While these changes will not directly affect current members and retirees,
they will help secure funding for the future, protecting everyone’s benefits in the years to come.

New Plan Design Highlights

• Effective July 1, 2009 , for new hires.
• First day membership in KPERS.
• Five-year vesting.
• Normal retirement at age 65 with five years of service, or at age 60 with 30 years of service.
• Early retirement at age 55 with ten years of service and an increased benefit reduction.
• Automatic annual 2 percent cost-of-living adjustments beginning at age 65.
• Employee contribution rate of 6 percent.

See www.kpers.org/issuebrief_plandesign.pdf (page 2) for a side-by-side comparison of the current and future plans. These changes do not apply to the Kansas Police and Firemen’s Retirement System or the Retirement System for Judges.

Details by Situation

Working Now
The benefit changes for future employees have no effect on current members. The “85 point rule,” early retirement options and all other eligibility requirements will stay the same for current employees. Benefits for current members are safe and guaranteed by the State of Kansas.

Two Improvements (effective July 1, 2009)

• All active members vest after five years of service.
• Employees still in their “year of service” become members immediately.

Note: Inactive members are not part of this benefit improvement. A member must be active to vest with five years.

Active Members Who Leave Employment – Vested

• Active members who are vested and leave employment will keep the same benefits and eligibility requirements that they have now. They can retire whenever they become eligible under the current plan. If they come back to work as a vested member, they will be covered under the current benefit plan.

Active Members Who Leave Employment – Non-Vested

• Active members who are not vested, and leave employment before the new plan goes into effect, have not earned a benefit. If they come back to work after the new plan goes into effect, they will be covered under the new benefit plan.

Hired Now Through June 30, 2009
A nyone hired now through June 30, 2009, will have the current benefits and eligibility requirements.
This includes all inactive members returning to work during this time.

Hired July 1, 2009, and After

New to the Retirement System

• New benefits, new requirements

Returning Inactive Members – Vested

• Current benefits, current requirements
• Inactive vested members returning to work on any date will keep the same benefits and eligibility requirements. Because they vested before leaving, they are guaranteed the benefit they earned under the original plan design.

Returning Inactive Members – Non-Vested

• New benefits, new requirements
• Inactive non-vested members returning to work July 1, 2009 , or after will have the new benefits and the new requirements. They did not vest before leaving and were not guaranteed a benefit. However, their past service credit will apply toward vesting their new benefit. If they have five years or more, they will vest right away.

Disability Benefit Recipients
Disability benefit recipients are generally under the same retirement benefits and eligibility requirements as active members. The “85 point rule,” early retirement options and all other eligibility requirements will stay the same for current disability recipients.

Returning to Work Directly From Disability

• Disability status does not affect retirement benefits for disability recipients.
  Original hire date determines which retirement benefits they receive.

Returning to Work After Withdrawing

• If a benefit recipient ends disability benefits and withdraws his or her contributions, that person gives up all Retirement System rights, service credit and benefits. If that person returns to work after withdrawing, his or her new hire date will determine retirement benefits.

Retirees
The benefit changes for future employees have no effect on retirees. Nothing about their benefits will change.

Employers
Benefit changes generally have no effect on employers right now. Non-school employers should continue sending membership enrollment forms after employees have completed their “year of service.” KPERS staff is currently developing a plan to implement all of the benefit changes. We will have more information for employers during the Designated Agent Workshops this fall.

August 9, 2007