The information in this booklet is very important to the security of you and your family! As a member of our Delaware State Employees' Pension Plan, we strongly urge you to take the time to read it and to familiarize yourself with your rights, privileges, and obligations.

This booklet is meaningful to you whether you are a new State employee, one active with years of service, or one who is nearing and planning retirement.

The Pension Plan Law is necessarily written in legal language; therefore, this booklet has been prepared in lay language to help you better understand its provisions. The following pages should be informative to you and, it is hoped, will answer most questions you may have about your Plan.

Our office wants to be of assistance to all active and retired members of the Plan. Therefore, if you have questions or need assistance in any of your retirement plan matters, we would be pleased to be of service to you either directly or through the business or personnel office of your agency or school.

We strongly recommend that you contact the Office of Pensions as soon as you are ready to begin planning for your retirement.

NOTE: This booklet is only applicable to employees covered under the Delaware State Employees' Pension Plan. Nothing in this booklet is meant to extend or change in any way the provisions expressed in the Plan. If there is any conflict between a provision in this booklet and the Plan (Chapter 55, Title 29, Delaware Code), the Plan controls.

TABLE OF CONTENTS

1. MEMBERSHIP

ELIGIBILITY

You are a member of the State Pension Plan if you are a full-time or regular part-time employee of:

• the State
• the State Department of Education (formerly Department of Public Instruction)
• a School District
• the University of Delaware (excluding most faculty and designated professional staff)
• Delaware State University
• Delaware Technical & Community College
• Solid Waste Authority
• Office of Disciplinary Council
• Prothonotary's Office
• a State Agency supported in whole or part by federal funds granted to the State.

You are a "full-time employee" if you are employed in a position which requires at least 130 hours per month for at least 9 months during a period of 12 consecutive months.

You are a "regular part-time employee" if you are either (a) employed in a position which requires at least 50 hours per month for at least 9 months during a period of 12 consecutive months, or (b) employed in a position where the rate of pay is at least $200 per month for at least 9 months during a period of 12 consecutive months.  You are regarded as an "employee" during the period you are on an approved leave of absence.

There are six exceptions. You are not eligible to be a member if:

• you are a member of any other State of Delaware Pension Plan
• you are a member of a municipal retirement system financed in whole or part by the State of Delaware
• you are a member of a county retirement system financed in whole or part by the State of Delaware
• you are a participant in the federal C.E.T.A. Program or other similar programs
• you are employed as a "temporary employee"
• the primary employment function is to be a student.

You are a "temporary employee" if you are not employed on a full-time or regular part-time basis as defined above or you are employed on a temporary basis as a substitute or casual/seasonal.

BREAK IN SERVICE

If you leave State service before you have acquired five consecutive years of creditable service, your service credits will be canceled. They will be restored if:

• your discontinuance of employment is due to absence on account of military service, disability, or approved leave, and you again become an employee within four months following the completion of such military service, disability, or approved leave, or
• you again become an employee within four months after you leave State employment, or
• you again become an employee within two years after you are involuntarily terminated from State employment, or
• you subsequently acquire five consecutive years of credited service, provided that you repay any contributions you have withdrawn plus interest.

If you cease to be an employee after you have acquired five consecutive years of credited service, you are fully vested and qualify for a pension at retirement age, unless you withdraw your accumulated contributions. Upon termination, a vested pension application or a withdrawal form must be filed by your school or agency personnel office.

If you receive a refund of your contributions and subsequently return to State employment, you should contact the Pension Office for information relative to the options available to you regarding prior service credit.

MEMBER IDENTIFICATION

Your Social Security number and your EMPLID number are your Plan identification numbers. To assure proper identification and prompt service, always include your Social Security number in addition to your full name, mailing address, phone number, and signature in all communications concerning your pension status.

CONTRIBUTIONS

You contribute 3% of that portion of your annual compensation which exceeds $6,000 per calendar year. Effective January 1, 1993, the Federal and State income tax on your contributions is tax deferred pursuant to Section 414(h)(2) of the United States Internal Revenue Code.

2. BENEFIT ELIGIBILITY

VESTED PENSION

You are fully vested after five (5) consecutive years of earned credited service and qualify for a pension at retirement age.

SERVICE PENSION

You are eligible for a service pension beginning the month after you leave employment if:

• you are at least 62 years of age and terminate service after June 30,1988 with at least five consecutive years of credited service, not counting any claimed or purchased service other than purchased service for sabbatical leave and military service (interrupting employment), or
• you are at least 60 years of age and have at least 15 years of credited service, not counting any claimed or purchased service other than purchased service for sabbatical leave and military service (interrupting employment), or
• you have 30 years of credited service.

EARLY RETIREMENT

You may retire with a reduced service pension if you have reached age 55 and have at least 15 years of credited service, not counting any claimed or purchased service other than purchased service for sabbatical leave and military service (interrupting employment). However, in order to reflect the longer period of time over which payments will be made, your pension is the regular service pension calculation, reduced by 0.2% for each month you are under age 60 when you retire.

You may retire with a reduced service pension, regardless of age, if you have at least 25 years of credited service, not counting any claimed or purchased service other than purchased service for sabbatical leave and military service (interrupting employment). However, in order to reflect the longer period of time over which payments will be made, your pension is the regular service pension calculation, reduced by 0.2% for each month that you are short of 30 years of credited service.

DISABILITY PENSION

Eligibility

If you become disabled, you are eligible to apply for a disability pension if you have completed five consecutive years of credited service, not counting any claimed or purchased service other than purchased service for sabbatical leave and military service (interrupting employment). Your application is subject to the approval and review of the Medical Committee of the Board of Pension Trustees. During the application process, you will be kept on the active payroll from the inception of your disability to the end of the third full month during which you will receive payments at the same rate of compensation you received before you became disabled. You will receive service credit for this period; however, it cannot be used for eligibility purposes.

Your eligibility ceases at the end of the month in which you recover and are offered employment as an employee. Termination of a disability pension does not affect your right to qualify for a regular pension or another disability pension.

Proof

You are considered eligible for a disability pension if you have a physical or mental disability which prevents you from performing the duties of your position. If you apply for a disability pension, your examining physician must submit a report on a form supplied by the Office of Pensions. The Medical committee of the Board of Pension Trustees then reviews your case and makes a recommendation to the Executive Secretary to the Board of Pension Trustees, who either grants or denies the application.

Post-Disability Earnings

Your disability pension will be reduced to the extent that earnings from any gainful occupation or business after you become disabled exceed one-half of your annual rate of compensation received before you became disabled, adjusted annually by any percentage increase in the total "Median Usual Weekly Earnings" as published by the U.S. Department of Labor. Until you are age 60, you must report annually to the Board of Pension Trustees by April 30 the total of such earnings for the previous calendar year. A form for this purpose will be supplied by the Office of Pensions. After age 60, no earnings limitation applies.

SURVIVOR BENEFITS

Joint and Survivor Option

At the time of your retirement, you may make an irrevocable election to have your pension reduced by 3% in order to provide your eligible survivor a pension equal to three-fourths of your reduced pension rather than one-half of the pension you would have been eligible to receive.

If you die while an active employee after you have acquired five consecutive years of credited service not counting any claimed or purchased service other than purchased service for sabbatical leave and military service (interrupting employment), your eligible survivor will be paid a survivor's pension beginning the month following your death. The amount of the pension will be three-fourths of the reduced service pension you would have been eligible to receive.

If you die while receiving a service or disability pension, the pension payable to your eligible survivor or survivors, beginning the month following your death, will be equal to either one-half or three-fourths of the disability or service pension you are receiving, depending on the survivor election made at time of retirement.

If you die while not in active service and have a vested right to a pension, your eligible survivor will be eligible to receive a survivor pension equal to one-half of the service pension you would have been entitled to receive. The survivor's pension will begin with the month you would have been eligible to receive such pension.

Eligible Survivor

An eligible survivor in the order of priority as established by law is as follows:

1. surviving spouse;
2. unmarried child or children either under age 18 or between age 18 and 22, and attending school on a full-time basis, or over age 18 but permanently disabled before age 18;
3. dependent parent who was receiving one-half of his or her support from you at the time of your death.

You may change the order of priority by filing a notarized form with the Board of Pension Trustees.

Surviving Spouse Under 50

If your spouse is under age 50 at the time of your death, the survivor's pension will be actuarially reduced for each month he or she is under age 50. However, this reduction will not apply for any period during which your surviving spouse is caring for an unmarried child either under age 18 or between ages 18 and 22 and attending school on a full-time basis, or over age 18 but permanently disabled before age 18.

DEATH BENEFITS

Contributions

If you die leaving no eligible survivors, your beneficiary(ies) will be paid a lump sum equal to the excess, if any, of your accumulated contributions with interest less all pension payments made, including survivor's benefits. You may designate a beneficiary by completing a P-1 Actuarial form. This form should be updated to reflect any changes in your marital status or dependent children. If there is no designated beneficiary, the sum will be paid to your estate.

Post-Retirement Group Life Insurance

At the time of your retirement, you will have the opportunity to designate a beneficiary(ies) to receive a lump sum payment of $7,000 at the time of your death. If there is no designated beneficiary, the $7,000 would be paid to your estate.

REFUND OF CONTRIBUTIONS

Upon application, your accumulated contributions with interest will be paid to you when you leave State employment. Withdrawal of your contributions will terminate your membership in the Plan and will void any rights you have to future benefits in the Plan. This refund will not be made to you within 90 days following the receipt of your last check.

The State is required by federal law to withhold 20% of the taxable portion of your refund that is eligible for rollover distribution, unless you choose to have that portion of the refund subject to withholding made payable directly to your IRA or to another employer plan that accepts rollovers.

In addition, any refund from the Plan prior to you obtaining age 59 1/2 years will be subject by the Internal Revenue Service to a 10% penalty for early withdrawal.

WORK RESTRICTION

You cannot receive a pension from the Plan during any month you are an employee of the State, unless you are:

1. an official elected by popular vote at a regular State election, or
2. an official appointed by the Governor and confirmed by the Senate, or
3. a temporary employee whose earnings from such temporary employment do not exceed the amount of earned income allowed by the U.S. Social Security Administration without affecting Social Security benefits. If a temporary employee does exceed the allowable earned income, his State pension shall be reduced using the same formula as used by the U.S. Social Security Administration to reduce social security benefits for such excess earnings.
4. A registration or election official, or a juror.
5. A substitute teacher employed by a school district in the State of Delaware.

Service as an employee of the State after you retire is governed by the Rules and Regulations adopted by the Board. Please contact the Pension Office before accepting employment.

3. CREDITABLE SERVICE

GENERAL

Creditable service is used to determine both your eligibility for retirement benefits and the amount of these benefits.

Creditable service represents periods of employment that are either earned, claimed, or purchased. Special rules apply to periods of Worker's Compensation.

The following describes the types of service credit which may be earned, claimed, or purchased:

EARNED SERVICE

You earn one month of creditable service for each month during a year in which you are an employee who works in a position which is full-time or regular part-time (see definitions under Section 1).  As of January 1, 1999, service credit will be granted on a day-for-day basis, which will allow for compliance with the law regarding leaves and corresponding service.

No more than one year of service is creditable for all employment in one year.

CLAIMED SERVICE

Military Service (Pre-Employment )

If you were hired into a pension-covered position before July 1, 1976, you may receive service credit for up to five years of full-time active duty in the Armed Forces of the United States. However, you must have become an employee within 5 years after completion of your tour of duty or after completion of a course of professional or vocational training (if such course was begun within 5 years of completion of tour of duty).

A course of professional or vocational training is defined as one leading to a certificate, diploma, or degree and offered by a public or private non-profit or proprietary institution approved by the Department of Education. You must have been enrolled on a continuous, full-time basis and completed the course of instruction.

The five-year period does not apply to full-time officers and members of the National Guard of the State who were active members of the Pension Plan on July 1, 1970.

Military Service (Interrupting Employment )

If you are called into active service or volunteer for active service in the Armed Forces or the National Guard of the State while you are a member of the Plan and you return to covered employment with the State within 90 days after discharge, you will receive full creditable service for such full-time continuous, active military service.

PURCHASED SERVICE

The following types of service may be purchased for credit:

Sabbatical Leave

Professional educational employees certified by the Department of Education will receive service credit for periods of sabbatical leave. Other employees may receive credit for an approved sabbatical leave if they make contributions to the Plan equal to the employee contributions and the State's contribution, which would otherwise have been made if they had continued to work.

Professional Educational Employment

Subject to the conditions listed below, you may purchase up to four years of service credit for professional educational employment, which means full-time employment for another State, a municipality in another state, the Federal Government, or an accredited private school or college anywhere in the world. It does not include part-time employment as a graduate teaching assistant or employment after you begin receiving pension checks from the Fund. An accredited private school or college is one which is recognized by the Department of Education.

To be eligible, you must have become a school teacher, professional administrative or supervisory employee, or school nurse employed in a public school, the State Department of Education, the University of Delaware, Delaware State University, or Delaware Technical and Community College, and have been hired into a pension-covered position prior to July 1, 1976.

In addition, you must pay to the Plan 5% of your final average compensation for each month to be credited. The credit purchased cannot be used to determine eligibility for a reduced service pension.

Military Service

You may purchase up to five years of credit for full-time active duty in the Armed Forces, by paying into the Plan an amount equal to the actuarial value of the credits purchased as determined by the Board of Pension Trustees. The credits purchased cannot be used to determine eligibility for a pension.

Other Governmental Service

You may purchase up to five years of credit for full-time employment performed for another state, a political subdivision of another state, the federal government, an accredited private school or college anywhere in the world, or service with the State of Delaware for which you will not receive credit in another Delaware State, county, or municipal pension plan. The amount is equal to the actuarial value of the credits purchased. The credits purchased cannot be used to determine eligibility for a pension.

Limitations

You may not acquire more than 10 years of credited service for military service, other governmental service, and professional educational employment.

Medical Leave

You may purchase credit for an approved medical leave (including maternity leave of up to one year). For this credit you must pay an amount which will be determined by the Pension Office at the time you retire. The credit purchased cannot be used to determine eligibility for a pension.

Personal Leave

You may purchase credit for an approved personal leave. For this credit, you must pay an amount which will be determined by the Pension Office at the time you retire. The credit purchased cannot be used to determine eligibility for a pension.

4. BENEFIT COMPUTATION

Your pension amount is primarily based on your years of credited service (to the nearest 1/12 of a year) and your Final Average Compensation. Your Final Average Compensation is 1/36 of the total compensation paid to you during the three periods of 12 consecutive months during which your compensation was the highest.

Your monthly benefit is computed using two separate calculations.   Calculation No. 1 is computed be multiplying your Final Average Compensation (F.A.C.)  times 2 % to equal Factor No. 1.  Calculation No. 2 is computed by multiplying your F.A.C. times 1.85% to equal Factor No. 2.  Factor No. 1 is then multiplied by your years of service prior to January 1, 1997 (to the nearest 1/12 of a year).  Factor No. 2 is then multiplied by your years of service after December 31, 1996 (to the nearest 1/12 of a year).  The calculation using Factor No. 1 is added to the calculation using Factor No. 2 to determine your gross monthly pension benefit.   The calculation is subject to minimal limitations.

The pension payable to your eligible survivor(s) is equal to either one-half or three-fourths of the reduced pension you were entitled to receive at the time of your death.

In the case of an early retirement pension, the amount computed by the formula is reduced by 0.2% for each month you are under age 60 or 0.2% for each month that you are short of 30 years of credited service.

MINIMUMS

If you have at least 15 years of earned service at the time of retirement, including some service prior to June 1970, the minimum pension payable is the lesser of $150 per month or your Final Average Compensation.

If you do not have 15 years of such service and you first entered State service after May 1970, but prior to July 1976, the minimum pension payable is $5 multiplied by your years of service up to a maximum of 30 years.

If you were hired after June 30, 1976, there is no minimum pension benefit except for a guarantee that you will get at least $1.00 per month for each year of creditable service.

TAX TREATMENT OF BENEFITS

To determine the proportionate part of the total amount received each year which is non-taxable, an exclusion ratio will be determined by using tables provided by the Internal Revenue Service. This ratio is determined by dividing your employee contributions which were subject to tax by the number of months pension benefits are expected to be received based on your age at retirement. The dollar exclusion will be calculated by the Pension Office when you begin to receive your pension benefit.

5. EXAMPLES
($.00 OMITTED)
As of July 1, 2001

EXAMPLE #1

Employee retiring at age 60 with 30 years of service and a Final Average Compensation (F.A.C.) of $1,000 per month.  This employee has 25.5 years of service prior to 1/1/97 and 4.5 years of service after 12/31/96.

Employee will receive a State pension benefit of $593 per month. Upon the death of the employee, his or her eligible survivor will receive a State pension benefit equal to either one-half or three-fourths of the pension the employee is eligible to receive at the time of his or her death.

EXAMPLE #2

Employee retiring at age 60 with 15 years of service and a Final Average Compensation (F.A.C.) of $2,000 per month. The employee has 10.5 years of service prior to 1/1/97 and 4.5 years of service after 12/31/96.

Employee will receive a State pension benefit of $586 per month. Upon the death of the employee, his or her eligible survivor will receive a State pension benefit equal to either one-half or three-fourths of the pension the employee is eligible to receive at the time of his or her death.

EXAMPLE #3

Employee retiring at age 60 with 40 years of service and a Final Average Compensation (F.A.C.) of $2,000 per month.  This employee has 35.5 years of service prior to 1/1/97 and 4.5 years of service after 12/31/96.

Employee will receive a State pension benefit of $1,586 per month. Upon the death of the employee, his or her eligible survivor will receive a State pension benefit equal to either one-half or three-fourths of the pension the employee is eligible to receive at the time of his or her death.

DISABILITY PENSION

Example #4

Employee becomes disabled at age 50 with 15 years of service and a Final Average Compensation (F.A.C.) of $1,000 per month.  The employee has 10.5 years of service prior to 1/1/97 and 4.5 years of service after 12/31/96.

Employee will receive a State pension benefit of $293 per month. Upon the death of the employee, his or her eligible survivor will receive a State pension benefit equal to either one-half or three-fourths of the pension the employee is eligible to receive at the time of his or her death.

VESTED SERVICE PENSION

Example #5

Employee leaves State employment at age 45 with 15 years of service and a Final Average Compensation (F.A.C.) of $1,000 per month.  This employee has 10.5 years of service prior to 1/1/97 and 4.5 years of service after 12/31/96

Employee will receive a State pension benefit, when he or she reaches age 62 of $293 per month. If the employee dies prior to his or her retirement date, the eligible survivor will be eligible to receive a pension equal to one-half of the service pension the employee would have been entitled to receive. The survivor's pension will begin with the month the employee would have been eligible to receive a benefit.

EARLY RETIREMENT PENSION

Example #6

Employee retires at age 55 with 15 years of service and a Final Average Compensation (F.A.C.) of $1,000 per month.  This employee has 10.5 years of service prior to 1/1/97 and 4.5 years of service after 12/31/96.

Employee will receive a State pension benefit of $258 per month. Upon the death of the employee, his or her eligible survivor will receive a State pension benefit equal to either one-half or three-fourths of the pension the employee is eligible to receive at the time of his or her death.

Example #7

Employee retires at age 53 with 27 years of service and a Final Average Compensation (F.A.C.) of $1,000 per month.  This employee has 22.5 years of service prior to 1/1/97 and 4.5 years of service after 12/31/96.

Employee will receive a State pension benefit of $495 per month. Upon the death of the employee, his or her eligible survivor will receive a State pension benefit equal to either one-half or three-fourths of the pension the employee is eligible to receive at the time of his or her death. 

6. UNIVERSITY OF DELAWARE

MEMBERSHIP ELIGIBILITY

You are a member of the State pension plan if you are a full-time or regular part-time employee of the University of Delaware (excluding most faculty and designated professional staff).

BENEFIT ELIGIBILITY

If you meet the membership eligibility requirements stated above, or are a faculty member, or a designated professional staff employee who chose to remain in the Plan prior to January 1, 1975, or a staff employee who became a professional employee and continued to make the required contributions, you are eligible for pension benefits under the same rules as other State employees covered by the Plan.

However, if you are a faculty member or a designated professional staff employee who chose to cease coverage under the Plan but left your accumulated contributions in the Fund, you may be eligible for certain pension benefits. Please contact the Pension Office for the benefit eligibility rules.  

7. HEALTH CARE

For eligible pensioners who were first employed by the State in a pension creditable position before July 1, 1991, the State will pay 100% of the normal monthly employer share.

For eligible pensioners who were first employed by the State in a pension creditable position on or after July 1, 1991 (except for those receiving disability pensions), the State shall pay a portion of the normal monthly employer share based on the number of years of creditable service at the time of retirement.

• Eligible pensioners employed by the State for less than 10 years at the time of retirement, you are eligible to participate in the group health plan; however, none of the monthly employer share will be paid by the State.
• Eligible pensioners employed by the State for at least 10 years but less than 15 years at the time of retirement, 50% of the monthly employer share will be paid by the State.
• Eligible pensioners employed by the State for at least 15 years but less than 20 years at the time of retirement, 75% of the monthly employer share will be paid by the State.
• Eligible pensioners employed by the State for at least 20 years at the time of retirement, 100% of the monthly employer share will be paid by the State.

For disability pensioners, the State will continue to pay 100% of the monthly employer share regardless of years of creditable service.

8. APPLYING FOR A PENSION

SERVICE, DISABILITY, OR VESTED APPLICATION

At least three months before you plan to retire, you should contact your personnel representative in your school or agency to begin the application process. The following documents, as applicable, must accompany the application for benefits:

• Copy of your original certificate of birth or one of the following:

a. Delayed record of birth
b. Statement of birth as established by Social Security Administration
c. Statement of birth as issued by Bureau of Vital Statistics
d. Baptismal Certificate (as infant)

(If married, copy of spouse's birth certificate, for future survivor pension purposes)

• Copy of your marriage certificate. All employees are required to file this document as evidence of their name change. Employees may file it for use by the Office of Pensions for the purpose of establishing eligibility for a survivor's pension.

• Discharge papers or other acceptable personnel documents verifying full-time active military service if pension service credit is requested.

• Certification letter from former employer verifying other purchasable service credit.

• One copy of your signed Social Security Identification card.  If applicable, copy of spouse's Social Security Identification card for survivor pension purposes and dependent's Social Security Identification card if covered by health insurance.

• Copy of Medicare card. If you are, or your spouse is, over age sixty-five (65) or Medicare eligible, a copy of the Medicare card is needed to ensure proper health care coverage.

• Medical information as requested by the Office of Pensions at the time of your filing for disability pension.
• Beneficiary designation for life insurance after retirement (G.L. 1).
• Joint and Survivor Retirement Benefit card (JSB-1).
• TWE form (Tax Withholding Election)
• DA Form (Pensioner's Bank/Credit Union Deposit Authorization) - mandatory for all pensioners with an effective date on or after January 1, 1996.

An application must be filed by the pensioner indicating acceptance or refusal of the following coverage offered in the Pension Group.

• Health Care - each pensioner, spouse, and eligible child is eligible for membership in the State group.
• Dental Health
• Blood Bank

SURVIVOR'S APPLICATION

All of the above documents must be submitted (as applicable) plus the following:

• Certified Copy of Death Certificate
• Copy of each child's birth certificate. This is needed only if pension is payable to a child or to a widow/widower who is under age 50 and has an eligible child in his/her care.
• Copy of appointment of guardian/trustee. This is needed if pension is payable to minor children or a permanently disabled child (supporting medical information is also required).
• Statement from school or college as applicable, verifying that child is unmarried and enrolled full-time in school or college. This is needed only if the child is over age 18, but not yet age 22.

Nothing in this booklet is meant to extend or change in any way the provisions expressed in the Plan. If there is any conflict between a provision in this booklet and the Plan (Chapter 55, Title 29, Delaware Code), the Plan controls.

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