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Special Notice to Employers
Calendar and service reporting is fundamental to providing accurate member benefits. As we approach the end of another school year, we thought it would be valuable to remind you that pension reporting cannot be altered in any way to accommodate special retirement arrangements.
A calendar reflects the employment days for a given position in a school year and must be consistent for all of the individuals employed by the school board in that same position. It cannot be used in specific circumstances to influence a desired pension outcome (inflate a benefit, grant an earlier entitlement, etc.). In fact, to do so would be fraudulent.
Please let us know if you are unsure about whether your reporting practices comply with our plan provisions. It is in the best interest of all your employees to identify any potential issues before they result in delays in processing pension requests or recalculation of pension benefits.
The attached memo reviews how school-year calendars can affect your employees’ retirement dates and credit accrual.
School-year Calendars and Credit Accrual
Each employee has a contractual obligation to work a specific number of days in a school year.
Calendars have always identified the number of work days in a school year for specific groups of members. We then translate this number into a percentage of school year completed for benefit calculations. A school-year calendar includes professional development days for teachers and vacation days for administrators.
Most school boards have multiple school-year calendars. The teaching staff may have a number of calendars consisting of 194 days (exam days are counted as instructional days) and administrative staff usually has between 204 and 261 days. These are the days for which a member receives pensionable salary and is expected to work to fulfill their contractual obligation.
Example—June 30th resignation
A member cannot obtain a full year of credit until they have completed the full year of employment (worked all the days in the group calendar). Also, a member cannot begin receiving their pension until the first of the month following the last day of employment.
The following assumptions apply to the examples below:
- Member is 55-years old
- 31 qualifying years of service credit
- Annual pensionable salary is $84,000
- School board has three school-year calendars:
- Calendar A—261 days, last working day August 31st
- Calendar B—216 days, last working day July 16th
- Calendar C—194 days, last working day June 27th
Members who retire in the middle of their school-year calendars, and incept their pensions immediately, will only accrue credit for that year based on the percentage of school year they have actually completed.
1. Administrative Position A
Based on the above assumptions, the following calculations would be made for an individual employed under Calendar A if they resign at the end of June for a July 1st pension inception:
- In their last school year, the member would receive approximately 217/261 of actual and qualifying credit, or 0.8314 years.
- The salary used in the average “best-five” calculation would be 0.8314 of $84,000 and 0.1685 of the sixth highest salary.
When an employee in this position completes their school year by working until the end of August, they will receive full service credit and salary and be eligible to begin receiving their pension in September.
2. Administrative Position B
If an individual works in a position that includes work days in July, they will only accrue a full year of credit once they have completed their last working day in July. An employee in this position who retires and incepts their pension mid-year would be given proportionate credit and salary out of 215 days.
Based on the above assumptions, the following calculations would be made for members who resign at the end of June for a July 1st pension inception:
- Member would receive approximately 194/216 of actual and qualifying credit, 0.8981 years.
- The salary used in the average “best five” calculation would be 0.8981 of $84,000 and 0.1018 of the sixth highest salary.
When this employee completes their school year by working all of the work days in July, they will receive full service credit and salary and be eligible to begin receiving their pension in August.
3. Teaching Position
In their last school year, a teacher working in this school board would receive a full year of service credit and a full year of qualifying credit by the end of June. Therefore, the full $84,000 would be used in the average “best-five” calculation.
April 4, 2001
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