The Money Purchase factors used to determine monthly annuity benefits will change for retirements on and after July 2, 2012 based upon a recent experience study conducted by SURS actuaries. For individuals who retire after July 2, 2012, this change in factors will result in an approximately 8% downward adjustment in monthly benefit payment if their Money Purchase calculation was higher than the General Formula calculation. Please note that the change in Money Purchase factors will not affect:
- Current annuitants.
- Members in the Self-Managed Plan.
- Members who first became SURS-eligible on or after July 1, 2005.
- The General Formula calculation.
SURS calculates a retirement benefit using all formulas for which the member is eligible, and the member's annuity is based on the formula that provides the highest benefit. The General Formula calculation is based on a member's age, years of service, and Final Rate of Earnings. The Money Purchase Formula calculation utilizes a member's contributions, interest, and age at retirement to determine the benefit amount. The Money Purchase Formula is an actuarial calculation that sets the benefit amount at a level that will allow a member to recover all contributions and interest over their projected life expectancy. If the Money Purchase is the highest formula, members' annuities will be calculated using the current factors table as long as SURS has their application and their annuity begin date is no later than July 1, 2012. The new factors table will be used to calculate the Money Purchase formula beginning with all August 1, 2012 annuities.
Faculty and staff who are considering retirement should make that decision thoughtfully. Primarily those employees planning to retire in the next 1-2 years, or deciding whether to retire this year or next year, will want to carefully consider the impact of the factors change. SURS estimates that active participants can recover this monthly reduction by delaying retirement for approximately 10 to 11 months. Inactive participants would need to delay retirement for approximately 12 to 14 months. It may be more detrimental for someone to retire too early. Employees are encouraged to use the SURS online Estimator to calculate their SURS benefits assuming retirement at different points in time to help assess the impact.
The Benefit Estimator on the SURS website has been updated so that estimates for retirement dates prior to 7/2/2012 are based on the current Money Purchase Factor tables, and retirement dates after 7/2/2012 are based on the newly revised Money Purchase Factor tables. The actual reduction in a monthly annuity calculated using the Money Purchase Formula is unique to each individual participant. For this reason, SURS encourages all participants to utilize the Benefit Estimator.
Watch your email and NESSIE's home page for dates of on-campus SURS Seminars to be held this Fall. The upcoming SURS retirement presentations will address both the General Formula and the Money Purchase Formula and allow time for employee questions.
For more information, consult the SURS member guide. The July 2, 2012 Money Purchase table has been added to the online Traditional and Portable Member Guides. You will find a link to the table at the bottom of page 19 of the Traditional Member Guide and at the bottom of page 17 in the Portable Member Guide.
See also the May 2011 SURSAdvocate or the SURS News Release. You may contact SURS directly at (217) 378-8800.
