[City or Department]
DISCLOSURE STATEMENT
This Disclosure Statement is provided to each employee who is participating in the [name of employer’s local police or fire money purchase plan]. Your employer has chosen to cover new employees hired after [Date] under the FPPA Defined Benefit System and to offer all current employees the choice to either remain covered by [name of employer’s local police or fire money purchase pension plan] or elect coverage under the FPPA Defined Benefit System administered by the Fire and Police Pension Association (FPPA).
This statement explains and compares the benefits currently provided by your current plan and the benefits offered by the FPPA Defined Benefit System. Pursuant to Rule 609 of the FPPA Rules & Regulations and Rule 2.02 of the Statewide Hybrid Plan Rules Regulations, this statement must be delivered or mailed to you at least ten (10) days prior to the deadline for making individual election of a pension system.
You are urged to thoroughly examine the following information prior to making your decision on your pension system. The deadline for making individual elections of a pension system (FPPA or Local Plan) is[Date]. If you have any questions, contact FPPA or your supervisor.
The Disclosure Statement is provided as a summary and comparison of basic plan terms.
While the information provided is accurate, it is not necessarily complete and is not designed to
address all situations. The governing statutes and plan documents control the actual terms of each plan described. Please contact FPPA for clarification on any issue. You are also highly encouraged to attend the Disclosure Meetings offered by FPPA and your employer as the information provided here will be discussed and you will have an opportunity to ask questions regarding your personal situation.
Final Version dated[Date]
SUMMARY COMPARISON OF PENSION PLANS1. THE BASIC PLAN STRUCTURE
Local
Money Purchase Plan / Money Purchase Component of the Statewide Hybrid Plan / Defined Benefit Component
of the Statewide Hybrid Plan / Statewide
Defined Benefit Plan
Money purchase plans are also commonly known as defined contribution plans. In this type of plan the contribution is “defined,” and then the benefit becomes the amount of cash available (contributions and earnings or losses less expenses) at termination of service.
Under this plan, only your contribution rate is defined; your retirement benefit will be determined by the funds in your account and the distribution method(s) you choose.
Please also see the SWH-MP brochure for more detail. / A hybrid plan is a combination of a money purchase plan and a defined benefit plan. A portion of the contribution goes to fund a defined benefit which is a monthly benefit and is payable for the retiree’s lifetime, and the remainder of the contribution, if applicable, funds a money purchase account that is invested and available (contributions and earnings or losses less expenses) at retirement or termination of service.
Please refer to the Money Purchase Component of the Statewide Hybrid Plan column for specifics of that component.
Please also see the SWH-MP&DB brochure for more detail. / Under a defined benefit plan, the benefit is “defined” at the outset of your employment. The contribution goes in the plan to fund the established benefit. The benefit at retirement equals a certain percentage of the member’s base salary for the retiree’s lifetime.
Please see the SWDB Plan brochure for more detail.
2. REQUIREMENTS FOR NORMAL RETIREMENT
Local
Money Purchase Plan / Money Purchase Component of the Statewide Hybrid Plan / Defined Benefit Component
of the Statewide
Hybrid Plan / Statewide
Defined Benefit Plan
The normal retirement age is 55, but you may terminate employment at any age and receive a benefit immediately. However, the amount of your retirement benefit will depend upon your years of service inthe plan, the amount of contributions made by you and your employer, gains or losses from investments, and expenses of the plan.
Tax penalties may be imposed for early withdrawals. With limited exceptions, per IRS regulations, you must commence distribution of your vested account balance no later than April 1 of the calendar year following the calendar year in which you attain age 70 1/2.
Your benefit is also available in the event of a permanent occupational or total disability, or death.
Under this plan, only your contribution rate is defined; your retirement benefit will be determined by the funds in your account and the distribution method(s) you choose.
You will be eligible for full distribution of the member contributions, and any amounts "rolled over" to the plan for your account at any time you separate from service. After 5 years of service you are eligible for the full distribution of the employer contributions. However, all contributions and rollover amounts will be adjusted for gains or losses from investments, and expenses of the plan.
Upon FPPA approval, distribution of your benefit may be paid as a lump sum, periodic payments, an annuity or a combination of these options. As an alternative, at retirement you could convert the funds in your Money Purchase Component to a “monthly lifetime benefit” by transferring all or part of your MP Component to the DB Component of the Statewide Hybrid Plan. Once converted, the money is considered to be a portion of the member pension and may be adjusted for an election of a survivor benefit payout option and benefit adjustments.
Again, the amount of your benefit will depend upon the amount accumulated in your account. / Members who have attained at least 25 years of service credit in the plan, and are also at least age 55, qualify for normal retirement.
Your monthly defined benefit is based on the average of your highest 3 years’ base salary* (HAS) in the plan and is calculated at 1.5% per year for each year of service credit in the plan. Benefits are calculated using all service credit in the plan, whether earned or purchased.
*(For more information on Base Salary please refer to Section 12- Contributions.)
If you do not want to collect your normal retirement benefit at the time of your normal retirement, you may defer receipt of your benefit up to age 65 and receive an increased amount due to the later receipt of the benefit. This increase is the actuarial equivalent of the normal benefit.
Under this plan, your retirement benefit is "defined" at the outset of your employment. Your retirement benefit is paid for your lifetime.
Employment with other Colorado fire or police departments will count toward your retirement if you are covered by this plan in the other employment, and you did not take a refund of your contributions upon termination from that employment.
Please refer to column #2 for specifics on the Money Purchase Component of Hybrid Plan. / Members who have attained at least 25 years of service credit in the plan, and are also at least age 55, qualify for normal retirement.
Your monthly benefit is based on the average of your highest 3 years’ base salary* (HAS) in the plan and is calculated at 2% per year for the first 10 years of service credit plus 2.5% per year for each additional year of service credit.. Benefits are calculated using all service credit in the plan, whether earned or purchased.
*(For more information on Base Salary please refer to Section 12- Contributions.)
If you do not want to collect your normal retirement benefit at the time of your normal retirement, you may defer receipt of your benefit up to age 65 and receive an increased amount due to the later receipt of the benefit. This increase is the actuarial equivalent of the normal benefit.
Under this plan, your retirement benefit is "defined" at the outset of your employment. Your retirement benefit is paid for your lifetime.
Employment with other Colorado fire or police departments will count toward your retirement if you are covered by this plan in the other employment, and you did not take a refund of your contributions upon termination from that employment.
In addition, the SRA (Separate Retirement Account explained in Section 6) funds, if applicable, are available to you at the time your retirement benefit is awarded.
Note: FPPA reviews retirement age each year in the context of the annual actuarial study andhas the discretion to set the age anywhere between 55 and 60 years, depending upon actuarial expense and the current cost of the plan. The current age is 55 and no change is anticipated at this time.
3. REQUIREMENTS FOR VESTED RETIREMENT
Local
Money Purchase Plan / Money Purchase Component of the Statewide Hybrid Plan / Defined Benefit Component
of the Statewide
Hybrid Plan / Statewide
Defined Benefit Plan
From the first day of membership in the plan, you are fully vested in your member contributions and any amounts "rolled over" to the plan for your account.
Employer contributions are fully vested in the event of a permanent occupational disability, total disability or death; benefits payable from the Statewide Death and Disability (SWD&D) Plan.
You are also 100% vested upon and after attaining Normal Retirement (age 55, regardless of years of service).
Upon termination of employment for any other reason, you will be vested in employer contributions according to the following schedule:
Years of Service Vested %
Less than 1 0%
1 but less than 2 20%
2 but less than 3 40%
3 but less than 4 60%
4 but less than 5 80%
5 or more 100%
Your vested benefit (account balance) will become eligible for distribution upon death, permanent occupational or total disability, retirement or termination of employment. Adjustments are made for gains or losses from investments, and expenses of the plan. / Upon termination after at least 5 years of service credit, you are vested and eligible for a partial retirement benefit. When you reach age 55, you may draw a lifetime benefit. The benefit is based on the average of your highest three years’ base salary (HAS) in the plan and is calculated at 1.5% per year for each year of service credit in the plan.
See Section 11 regarding a refund of member contributions. / Upon termination after at least 5 years of service credit in the plan, you are vested and eligible for a partial retirement benefit. When you reach age 55, you may draw a lifetime benefit. The benefit is based on the average of your highest three years’ base salary (HAS) in the plan and is calculated at 2% per year for each year of service creditup to 10 years, then 2.5% for each year of service credit thereafter.
In addition, the SRA funds, if applicable, (explained in Section 6) are available to you at the time your retirement benefit is awarded.
Note: FPPA reviews vested retirement age each year in the context of the annual actuarial study and has the discretion to set the age anywhere between 55 and 60years, depending upon actuarial experienceand current cost of the plan. The current age is 55 and no change is anticipated at this time.
4. REQUIREMENTS FOR EARLY RETIREMENT
Local
Money Purchase Plan / Money Purchase Component of the Statewide Hybrid Plan / Defined Benefit Component
of the Statewide
Hybrid Plan / Statewide
Defined Benefit Plan
Since you are eligible for a benefit regardless of your age and years of service, under this plan there is neither an "early" retirement nor a "normal" retirement of the type provided under the Statewide Defined Benefit Plan. Your benefit is described in Sections 1, 2 and 3 above.
Tax penalties may be imposed for early retirement or distribution, however. / You may retire early if:
- You have 30 years of service credit (regardless of your age); or
- You are at least age 50 (with a minimum of five years of service credit).
However, the early retirement benefit that you would have received at normal retirement (age 55) is reduced on an actuarial equivalent basis to reflect the early receipt of the benefit. / You may retire early if:
- You have 30 years of service credit (regardless of your age); or
- You are at least age 50 (with a minimum of five years of service credit).
However, the early retirement benefit that you would have received at normal retirement (age 55) is reduced on an actuarial equivalent basis to reflect the early receipt of the benefit.
In addition, the SRA funds, if applicable, (explained in Section 6) are available to you at the time your retirement benefit is awarded.
5. REQUIREMENTS FOR DEFERRED RETIREMENT
Local
Money Purchase Plan / Statewide
Money Purchase Plan
Money Purchase Component of the Statewide Hybrid Plan / Defined Benefit Component
of the Statewide Hybrid Plan / Statewide
Defined Benefit Plan
Not applicable / Not applicable. / Any member retiring and eligible for a normal or vested retirement benefit may elect to defer receipt of such benefit until as late as age of 65. If you elect this option, your annual deferred retirement pension will be increased to be the actuarial equivalent of your normal or vested retirement pension. In other words, you receive an increased benefit amount since you are beginning the benefit payment later. / Any member retiring and eligible for a normal or vested retirement benefit may elect to defer receipt of such benefit until as late as age of 65. If you elect this option, your annual deferred retirement pension will be increased to be the actuarial equivalent of your normal or vested retirement pension.
In other words, you receive an increased benefit amount since you are beginning the benefit payment later.
6. SEPARATE RETIREMENT ACCOUNT (SRA)
Local
Money Purchase Plan / Money Purchase Component of the Statewide Hybrid Plan / Defined Benefit Component
of the Statewide
Hybrid Plan / Statewide
Defined Benefit Plan
Not applicable / Not applicable. / Not applicable. / For each year beginning in 1988, the FPPA Board may allocate the difference between contributions collected from you and your employer and the cost of the plan, to a separate account in your name. Monies in your SRA will accrue earnings (or losses) at the rate realized in the Fire and Police Members’ Benefit Investment Fund. Amounts allocated may fluctuate from year to year.
Effective July 1, 2017– June 30, 20180% of Base Salary is being allocated to the standard SRA for all members of the Statewide Defined Benefit Plan.
Members of departments who have reentered the system are paying ahighercontinuing contribution rate. As a result their SRA has two components; the standard SRA and the reentry SRA. The component of a member’s SRA attributable to the higher contribution rate is considered the reentry SRA. The reentry SRA cannot be used to subsidize the costs for the non-reentry members. Therefore, the reentry SRA could not be used if the SWDB Plan was actuarially unsound. The standard SRA would be used for that purpose. The reentry SRA would be used to correct any deficiencies in the cost of participation for the reentry members only.An additional 3.70% of Base Salary is being allocated to the reentry SRA. Therefore, the total SRA allocation is 3.70% of Base Salary effective July 1, 2017through June 30, 2018.
When you leave employment and are granted a retirement benefit, you will be eligible to receive the funds in your SRA in addition to your normal, vested or early retirement benefit.
Your SRA is also available if you are granted a permanent occupational or total disability benefit or in the event of payment of a survivor benefit from the Statewide Death Disability Plan.
You may receive the SRA money in a lump sum payout, or periodic installments.
As an alternative, you could convert the account to a “monthly lifetime benefit” by transferring all or a portion of your SRA to the DB component of the plan.
Once converted, the money is considered to be a portion of the member pension and may be adjusted for an election of a survivor benefit payout option and benefit adjustments.
The SRA is not available to you if you terminate with less than 5 years of service credit or if you terminate with more than 5 years of service credit but elect to receive a refund of your Member contributions rather than a retirement benefit. The SRA and Reentry SRA are not Member contributions subject to refund.
7. DEFERRED RETIREMENT OPTION PLAN (DROP)
Local
Money Purchase Plan / Money Purchase Component of the Statewide Hybrid Plan / Defined Benefit Component
of the Statewide
Hybrid Plan / Statewide