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Friday April 18th 2014

Hybrid Retirement Plan

SEBAC 2011 created a new Hybrid retirement plan option for professional employees of Higher Education institutions. The plan was created by Paragraph II.C. 7 of the Agreement, which reads:

Hybrid Defined Benefit/Defined Contribution Plan for Employees in Higher Education

Individuals hired on or after July 1, 2011 otherwise eligible for the  Alternate Retirement Plan (hereinafter referred to as “ARP”) shall be eligible to be members of the new Hybrid Plan in addition to their existing choices. Individuals who are currently members of the ARP shall be eligible to join the Hybrid Plan on a one time option at the full actuarial cost. The Hybrid plan shall have defined benefits identical to Tier II/IIA and Tier III for individuals hired on or after July 1, 2011, but shall require employee contributions three percent (3%) higher than the contribution required from the Applicable Tier ll/IIA/lll Plan. An employee shall have the option, upon leaving state service, of accepting the defined benefit amount, or electing to receive a return of his/her contributions to the Hybrid Plan, plus a five percent (5%) employer match, plus four percent (4%) interest (hereinafter referred to as the “cash out option” . In the event the employee elects the cash out option, he/she shall permanently waive any entitlement they may have to health insurance as a retired state employee unless they convert the cash out option to a periodic payment as would be required under the current ARP plan.

This new plan gives state employees the option upon leaving state service of accepting the defined benefit amount or electing to receive a return of employee contributions to the hybrid plan plus a 5% match, plus 4% interest. The benefits are identical to SERS Tier II/IIA but the plan requires a 5% employee contribution.

July 1, 2012 was established as the commencement date for transfer into the Hybrid Retirement Plan, and it will remain open until 90 days after the IRS makes a determination on the SEBAC ARP Grievance (SAG) Award, which has not yet occurred.

SEBAC has been sending updates and revising its Q&A about the Hybrid Plan throughout the process of implementation. The cumulative revision of the Q&A can be found here.

 

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