Welcome to the Employees’ and Teachers’ Retirement System, part of the State

Retirement and Pension System of Maryland. This handbook will help you become

acquainted with the benefits and features of your retirement plan.

We designed this handbook to be easy to read, with sample calculations and a glos

sary of important terms. In addition to being a valuable resource for your retirement

planning, this manual also provides detailed information on benefits available to

you and your family during your career.

If you ever need assistance, please contact the State Retirement Agency. Retirement

offered through your employer after you retire. Contact your personnel office for

more information.

Each of you has our very best wishes for a productive, challenging career and a

fulfilling retirement.

Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Three Retirement System Plans . . . . . . . . . . . . . . . 1

Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Taking an Active Role . . . . . . . . . . . . . . . . . . . . . . . 2

Claimed Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Service Earned in Another State System . . . . . 6

Military Service . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Purchased Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Normal Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Full Cost. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Unused Sick Leave. . . . . . . . . . . . . . . . . . . . . . . . . . 9

Survivor Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Disability Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Employer Contributions . . . . . . . . . . . . . . . . . . . 22

Employee Contributions . . . . . . . . . . . . . . . . . . . 22

Supplemental Contributions . . . . . . . . . . . . . . . 23

System Investments . . . . . . . . . . . . . . . . . . . . . . . . . 23

System Safeguards . . . . . . . . . . . . . . . . . . . . . . . . 23

Your Board of Trustees . . . . . . . . . . . . . . . . . . . . 24

Key Elements of the Benefit Formula . . . . . . . . . . 25

Assumptions Used in Sample Calculations. . . . . 25

Service Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Primary Retirement Forms . . . . . . . . . . . . . . . . . . . 31

Filing Checklist. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Retirement Checklist . . . . . . . . . . . . . . . . . . . . . . . . 32

Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . 34

Tax Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

CostofLiving Adjustments . . . . . . . . . . . . . . . . . . 34

Address Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Reemployment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Garnishment of Pension Benefits. . . . . . . . . . . . . . 39

Newsletter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Web Site . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Personal Statement of Benefits. . . . . . . . . . . . . . . . 45

Seminars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Your Retirement Coordinator. . . . . . . . . . . . . . . . . 45

Special Communications Concerns. . . . . . . . . . . . 46

Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Conflicts/Appeals. . . . . . . . . . . . . . . . . . . . . . . . . 46

provide retirement benefits to the State’s public school employees, SRPS today cov

ers thousands of employees—from teachers and State personnel to our law makers

The system is administered by the State Retirement Agency of Maryland (SRA),

which manages the daytoday operations of the pension fund and handles all

membership matters —from enrollment to the payment of benefits. The Agency

operates under the direction of a 14member Board of Trustees, which establishes

policy, oversees investments, and represents our various employee interests.

Our membership includes close to 200,000 State and municipal employees, educa

tors, law enforcement personnel, judges, and legislators. Each of these employee

member of the Retirement System.

Retirement System members participate under one of three options:

Have I checked with my personnel office regarding

IMPORTANT: If you feel you are eligible to apply for a disability benefit, please

contact the Retirement Agency immediately.

As a member of the Retirement System of the State of Maryland, you earn service

are paid in a fiscal year (July 1 to June 30). For more detailed information on Plan C

benefits, see the Appendix.

Your service credits are used to determine both your eligibility for benefits and to

calculate the amount of your benefits. If you make a contribution in any month, you

will receive credit for the entire month. Parttime members receive full credit for

each month of parttime service in which contributions are received.

whether employed 10, 11 or 12 months, participate as 10month members. Each

month of service is credited as 1/10th of a year, and a full year of service credit is

earned September through June. This rule also applies to certain members of the

through your personnel office or the Retirement Agency. You must be a member to

claim service. See page 3 for when membership ends. No additional credit can be

claimed after you have left membership or have retired.

1. A single payment consisting of your contributions with interest to your

designated beneficiary, PLUS

2. An annual benefit for your spouse (paid monthly) equal to twothirds of

your Average Final Compensation. If you have no spouse, your children

under 18 years of age receive this payment until each attains age 18. Or, if

you have no spouse or minor children, this benefit is payable to your

dependent parent for life.

If you have no spouse, minor children, or dependent parent, then the Ordinary

Death Benefit will be paid to your designated beneficiary.

If you are married, your spouse may elect a monthly benefit instead of a onetime

The monthly survivor benefit is equal to the payment your beneficiary would

The State Retirement System provides important disability coverage in the unfortu

nate event that a serious injury or illness permanently incapacitates you from per

forming your job duties. While we hope you never have to apply for disability, an

accident, illness or injury due to military action can happen at any time. For this

reason, it is important that you be aware of the disability provisions of your plan.

Your Personal Statement of Benefits provides an estimate of the basic disability

allowance. Additionally, you should contact your personnel office to determine

what impact a disability retirement might have on your health insurance coverage.

If you are an employee of a State agency who takes a disability retirement, you are

The State of Maryland provides benefits for two types of disability: ordinary and

accidental. Ordinary disability covers a permanently disabling medical condition.

Accidental disability applies to a permanently disabling medical condition resulting

from injuries sustained from an accident that occurred on the job. For either type of

disability, the applicant must demonstrate that he or she is completely and perma

nently unable to perform the duties of his or her job, as determined by the

Retirement Agency’s Medical Board and approved by the Board of Trustees.

Individuals filing for disability must demonstrate that they are completely and per

There is no service requirement for accidental disability. Coverage is in effect

met:

Be aware that you cannot wait indefinitely to file for disability. Members of the

payroll or within 5 years of going off payroll. A 12month filing extension may be

granted if you can prove you were mentally or physically incapacitated from filing

within the deadline.

claim to the point where a decision is made by the Medical Board and the Board of

Trustees. Once approved by the Board of Trustees, you must then submit an appli

cation to accept a disability retirement. That’s why you shouldn’t wait until the last

benefits and disability are based on the same event and are paid over the same

period of time. However, the Retirement Agency does not offset your annuity (por

tion of benefit based on your contributions) and must leave enough benefit to cover

the cost of your health insurance premiums. If you apply for Workers’

Compensation benefits, please inform us immediately. Please include your Workers’

Compensation case number in this notification.

Only members who retire on ordinary disability are subject to certain earnings

restrictions if they become reemployed by a participating employer. Your earnings

summary of situations which may cause your disability benefit to be suspended,

see “Suspension of Disability Retirement.”)

As an active member, you should also be aware that your accumulated benefits

are protected if you leave the State Retirement System and you are vested (have

the minimum five years needed for vesting. If you are vested and return to work for

a participating employer while still classified as a member (membership in the

Employees’ System extends for four years once paid employment ends, Teachers’

System membership extends for five years), you will return to membership in the

Retirement System. If you return after the membership period ends, then you must

join the Pension System. Under those circumstances, you’ll retain your right to a

vested benefit from the Retirement System, while earning benefits from the Pension

System.

If you are in this situation, call a retirement benefits specialist for information on

receiving the vested benefit while continuing to work.

If your vested allowance is less than $50 a month, you may elect to receive a lump

sum payment of the allowance in lieu of a monthly benefit.

Approximately three months before your 60th birthday, the Retirement Agency

sends a letter and a blank estimate form to the address on record. After you return

the completed form, you’ll receive an estimate of your vested allowance under vari

ous allowance options. That’s why it’s important to keep the Retirement Agency

apprised of any address changes over the years. Please do your part to ensure that

we can contact you when benefits become payable at age 60.

age or service criteria:

Your annual retirement income is based on your service and average final compen

sation upon retirement. See “Calculating Your Benefits” for more information.

20 percent or greater are not automatically included in the calculation of average

Some people decide to take an early retirement. Requirements for early retirement

under the State Retirement System are a minimum of 25 years of eligibility service

prior to age 60.

Employees who opt for an early retirement receive a smaller pension. The

Retirement System plan provisions provide for a 6% reduction for each year the

payments begin prior to age 60 or 30 years of service, whichever produces the

smaller reduction. The reduction is calculated on a monthly basis which means that

generally, the benefit is reduced by .005 for each month payments begin early.

However, for members who earn service credits on a ten month basis (all teacher

plans. These plans range from the Basic Allowance, which provides the highest

monthly allowance for you alone, to options that reduce your monthly payment but

provide varying degrees of protection to your beneficiary(ies) upon your death.

You cannot change your option selection after your first payment becomes normally

due. We urge you to discuss your needs with your family and financial advisor.

Contact the State Retirement Agency if you need assistance in deciding which

option best suits your situation. Also keep in mind that the option you choose may

affect your beneficiary’s eligibility for continued health coverage after your death.

Check with your personnel office.

You should carefully review your personal circumstances before selecting an

These options are classified as singlelife because they provide benefits over the

retiree’s lifetime only. Upon the retiree’s death, any reserve funds remaining in

the account are distributed in a onetime payment to the retiree’s designated

beneficiaries.

Multiple beneficiaries may be named under the SingleLife Annuities. These benefi

ciaries may be changed as often as desired.

Provides a lower monthly benefit than the Basic Allowance, but guarantees

Provides a lower monthly benefit than the Basic Allowance, but guarantees the

return of your accumulated contributions and interest as established when you

retire. If you die before you have recovered the full amount of your accumu

lated contributions and interest, the remainder will be paid in a single pay

ment to your designated beneficiary or beneficiaries who remain alive.

smaller benefit payment than Option 1 or 4. Again, this is because benefits are

expected to be paid over two lifetimes, the retiree’s and the beneficiary’s, rather than

the retiree’s alone.

Only one beneficiary may be named under the DualLife Annuities. This beneficiary

may be changed, but it will cause a recalculation of the retiree’s benefit amount. In

must send proof of your beneficiary’s date of birth with your final retirement

application.

Provides a lower monthly benefit than the Basic Allowance, but guarantees that

after your death one half of the monthly benefit paid to you will be paid to your

surviving beneficiary for his or her lifetime. No further payments will be made

after the deaths of you and your beneficiary. If you choose this option, you must

send proof of your beneficiary’s date of birth with your final retirement applica

tion.

recalculated under Option 5 based on the new beneficiary designation. If you

choose this option, you must send proof of your beneficiary’s date of birth with

your final retirement application.

Provides a lower monthly benefit than the Basic Allowance, but guarantees

that after your death one half of the monthly benefit paid to you will be paid

to your surviving beneficiary for his or her lifetime. It also provides that your

monthly benefit will “popup” to the Basic Allowance for your lifetime if your

beneficiary dies before you. If your original beneficiary dies and you are col

lecting the Basic Allowance and decide to name a new beneficiary, your benefit

FORMULA—Unlike ordinary disability, accidental disability does not make use of

Example 5: Accidental Disability Retirement

To illustrate, let’s look at an employee who retires under accidental disability at age

51. His average final compensation is $42,000, and his employee contributions and

interest are $26,928. The two step formula uses a second calculation to determine

the annuity based on the employee contributions.

Example 6: Special Death Benefit

Consider a member who is killed on the job in the performance of duty. The mem

ber’s annual salary is $75,000 and the member has $40,000 of accumulated contribu

tions with interest. The member’s spouse* is his sole primary beneficiary.

* If the member is unmarried at the time of death, this benefit is payable to the

member’s minor children or, if no children, to the member’s dependent parents. If

Administration at 18007721213.

( ) If needed, schedule an appointment with a retirement benefits specialist to

review your estimated benefits.

( ) Discuss your estimated benefits/options with your family and financial advisor.

( ) Contact your personnel office to inquire if you may continue employer

provided benefits, such as health insurance, after retiring.

( ) Obtain proof of birth for beneficiary(ies).

( ) Prepare a retirement budget, estimating your retirement expenses against your

State retirement benefit, Social Security, and any other income.

( ) Contact your personnel office and file your final retirement application

(Form 1323).

( ) Provide proof of birth for designated beneficiary (if you choose Option 2, 3, 5,

or 6).

( ) Complete a Direct Deposit Electronic Fund Transfer SignUp (Form 85) for the

direct deposit (electronic transmission) of your payment to your bank, savings

institution, or credit union (mandatory).

( ) Complete the Reemployment After Retirement (Form 127) to acknowledge

an understanding of the consequences of reemployment after retirement

( ) Submit a formal letter of retirement to your employer.

To ensure the timely delivery of benefit payments, the Retirement Agency has insti

tuted a mandatory directdeposit policy for the payment of monthly benefits to all

retirees.

Payments are issued on the last day of each month. Because the payments are sent

electronically, funds post immediately to the retireeʹs bank account. At the time of

your first direct deposit, you will receive an advice slip showing the amount of your

payment, along with any deductions. After your first payment, you will receive

advice slips in January, July and in any month in which your net payment changes.

Retirees are required to pay both federal and state taxes on their Maryland State

another state after you retire, your pension will be subject to that state’s taxes.

You should contact a tax consultant or the appropriate tax agency for specific infor

mation on your tax responsibilities.

SRPS retirees may receive an annual costofliving adjustment (COLA) each July to

help keep pace with inflation. The adjustment is tied to the U. S. Department of

Labor’s Consumer Price Index, which is the standard unit of measurement for price

changes nationwide. A member must be retired at least one year as of July 1 to be

eligible to receive the adjustment.

Retirees from Plan C are subject to a twopart COLA calculation. Please refer to the

Appendix for more information.

the Retirement Agency apprised of any address changes during your retirement.

For your protection, you are required to notify the Retirement Agency of address

changes in writing. We cannot accept this information by telephone.

When you retire and begin receiving retirement benefits, your intention should be to

permanently retire from employment with the State or participating governmental

employer. Under no circumstances should your decision to retire be conditioned

upon an offer of reemployment, and in fact, no offers of reemployment should be dis

cussed by you and your employer prior to your retirement. Such a preexisting reem

ployment agreement would signify that there was no intention on your part to retire.

If after retirement you consider reemployment with the same employer from whom

tion of service.

The Internal Revenue Service (IRS) can impose a significant tax penalty on your

income if you are under the age of 59 ½, retire and begin receiving your monthly

retirement benefits, and are reemployed by the same employer from whom you

retired. In order to avoid this penalty, there must be a bona fide separation from

service between you and your former employer.

If you retire before your normal retirement age, there are also serious tax conse

quences to the State Retirement and Pension System if a bona fide separation from

service does not take place following your retirement and prior to your reemploy

ment with the same employer.

If after retirement you consider reemployment with the same employer from whom

you retired, you may wish to review and discuss this information with the

employer and your tax advisor. Failure to do so could result in a significant tax

penalty on your income.

An earnings limitation is the maximum annual income an SRPS retiree may earn

through reemployment (employment after retirement) without being subject to a

reduction of his or her monthly retirement allowance. Your earnings limitation will

be listed on the Notice of Retirement Allowance sent to you when you retire.

For a service retiree, this limit is the difference between your average final compen

sation (AFC) at retirement and your annualized Basic Allowance. With the excep

tion of a January 1 retirement, the earnings limit applies beginning the year follow

Your pension check may be reduced if after retirement you return to work for the

State of Maryland or another employer that participates in the State Retirement and

Pension System of Maryland. Participating employers include State agencies, State

universities and colleges, public schools and libraries, community colleges, and par

ticipating counties, cities and towns.

In accordance with Maryland law, a retiree who is rehired by the same employer

must have a break in service of 45 days.

A service retiree returning to permanent, contractual or temporary employ

ment with the same employer (i.e., his or her last participating employer

are considered to be one employer under these rules. Pension payments may be

reduced if earnings exceed the earnings limit.

Prior to accepting work with a participating employer, you are required by

law to notify the Retirement Agency in writing of your employer, anticipated

earnings and dates of employment. Contact the Retirement Agency for more

information.

Retired teachers and principals who meet certain guidelines and return to work as a

classroom teacher, substitute classroom teacher, teacher mentor or principal, respec

tively, and work in certain schools are not subject to an earnings limit if retired

under a service retirement or if retired early and have been retired early for at least

12 months. To find out if these exceptions apply to you, contact a retirement bene

fits specialist at 4106255555 or 18004925909.

Retired employees who accept contractual employment with the Department of

While serving as a judge, a retiree who is receiving a service retirement or a vested

allowance from the Employees’ Retirement System may choose to become a mem

ber in the Judges’ Retirement System and receive service credit under that plan. The

retirement benefit would be temporarily suspended while the retiree earns service

credit in the Judges’ Retirement System.

Earnings limits do not apply for service retirees who work for a nonparticipating

employer, become self employed or accept outofstate employment.

To protect the confidentiality of member accounts, a member must enter his or her

Social Security number and fourdigit personal identification number (PIN) before

accessing personal account information via the automated phone system. Your ini

tial PIN is the month and year of your enrollment. At retirement, your PIN changes

to the month and year of your retirement.

Your PIN is listed on your Personal Statement of Benefits.

The Agencyʹs automated phone system is accessible for the hearing impaired.

TDD/TTY users may dial 4106255535 to access the automated phone system.

If you require assistance that cannot be provided by phone or letter, you may

schedule an appointment to meet with a retirement benefits specialist. While walk

in counseling appointments are welcome, we recommend that members schedule

appointments in advance for quickest service.

From September to May of each year, specialists are available monthly at locations

across the state. Contact your personnel office or the Retirement Agency for specific

dates and locations. Regional counseling is by appointment only.

The Retirement Agency maintains a correspondence unit to respond to written

inquiries regarding benefit matters. When making an inquiry in writing, remember

to be specific about the information needing clarification and include copies of any

related documents, such as your Personal Statement of Benefits. Be sure to identify

Under Maryland’s Public Information Act, all information in a member’s retirement

account is confidential, including addresses, telephone numbers, birth dates and

military service. Member must apply for this

credit, unlike earned credit which accrues

automatically.

event that there are no primary beneficiaries

who survive the member/retiree.

based on changes to the Consumer Price Index.

of a benefit, and credit used to determine when

absence from work without pay, granted for the

following specific purposes: personal illness;

maternity/paternity; adoption; careerrelated

study; government sponsored or subsidized

employment; and service in a pro fessional or

the SRPS Board of Trustees, who determine eli

gibility for disability retirement.

plan in 1980, no further enrollment is possible.

Membership began your first day on the pay

roll. Membership ends if you are separated

from employment for more than: four years, if

a member of the Employees’ Retirement

System, OR five years, if a member of the

Teachers’ Retirement System. Other circum

of the United States, as verified by military

discharge papers.

other employer specifically named in retire

ment law.

bility service, with a full monthly benefit.

mental illness or medical condition other than

munity colleges, participating counties, cities

and towns, and municipal corporations.

participating employer, who is trained to assist

members with basic retirement matters such as

the completion of SRPS forms.

administers the State Retirement and Pension

System.

date. A member is vested after five years of

service.

the Pension System. These sections explain benefits as mandated by regulations in

the Annotated Code of Maryland, outlining specific formulas, rules and limitations

for Plan C members of the Retirement System. The sections shown here represent

appear in this Appendix which does appear in the front portion of this handbook,

please assume that Plan C benefits apply under the general explanation provided.

Pension System Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A1

Earned Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A1

Disability Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A4

Benefit Amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A4

Service Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A5

Normal Service Retirement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A5

Early Service Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A5

Types of Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A6

Employee Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A6

Key Elements of the Benefit Formula . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A6

As a Plan C member, the Pension System portion of your benefit is calculated under

the provisions of the Alternate Contributory Pension Selection Plan, the

Contributory Pension System or the NonContributory Pension System. Review the

criteria below to determine which rules apply to you.

The Alternate Contributory Pension Selection Plan provisions apply for the follow

ing members who are active as of June 30, 2006 (provided that they did not transfer

from the Retirement System after April 1, 1998):

Members of the Teachersʹ Retirement System Plan C,

elected to join the Alternate Contributory Pension Selection plan between

July 1, 2006 and June 30, 2007.

The Contributory Pension System provisions apply for the following members (pro

vided that they did not transfer from the Retirement System after April 1, 1998):

Members of the Employeesʹ Retirement System Plan C (who are not State

employees) who are employed by a participating governmental unit that

elected to join the Contributory Pension System between July 1 and

December 31, 1999, but did not elect to join the Alternate Contributory

Pension Selection plan between July 1, 2006 and June 30, 2007.

bility and creditable service and is used both in qualifying for benefits and in the

actual benefit calculation.

Service credit earned after selection of Plan C is divided into two types:.

Members who do not work the minimum 500 hours in a fiscal year may receive

prorated eligibility service according to the provisions of the applicable pension

system.

To prorate eligibility service, the Retirement Agency divides the normal hours you

work by 500 and multiplies the resulting percentage by 12 or 10 months, depending

on the number of months used to calculate your equivalent fulltime year. Partial

.8 x 10 months = 8 months .8 x 12 months = 9.6, rounded up to 10

8 months