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.
While the SEBAC Agreement was effective in October, union and state officials are still in the process of implementing the Hybrid Retirement Plan. The implementation was slowed by the lengthy process of updating the actuarial charts and testing the estimators that will assist individuals in estimating the cost to transfer past years of service pursuant to the SEBAC Arbitration Grievance Award. All the actuarial charts have been updated and the estimators are now available on the Comptroller’s website.
Please remember that while the implementation of this plan has been delayed, members will have ample time (until 90 days following the IRS’s private letter ruling on the SAG Award) to make an informed decision whether to transfer to the Hybrid Plan.
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.
SEBAC Attorney Dan Livingston spoke at a CCSU-AAUP Chapter meeting to discuss the implementation of the hybrid retirement plan and answer questions. The meeting was videotaped and can be viewed at http://www.youtube.com/user/csuaaup/videos.
You will see four videos that cover the meeting. The Hybrid Retirement Plan Implementation video is a general introduction to the plan. The Q&A section was split into three videos, Part 1, 2, and 3.
Handouts that were also available at the meeting include:
- Comptroller’s Office Plan Highlights Chart – For ARP to Hybrid Plan Transfer Purposes Only
- Retirement Services Memo re: General Provisions to Purchase Retirement Credit in the Hybrid Plan of the SERS
- Hybrid Plan Summary Plan Description
- Link to the webpage on the State Comptroller’s website with information on this opportunity