Employees and Teachers Retirement Systems

Employees’ And Teachers’ Retirement System

How SRPS Benefits Are Determined

The SRPS is the State Retirement and Pension System which provides defined benefit plan benefits based on a specific formula. This formula takes into account your years of creditable service and your final average salary. The Employees’ and Teachers’ Retirement System was closed to new members as of January 1, 1980. This information pertains only to employees who were enrolled prior to January 1, 1980, and who have elected to remain a member of the Retirement system. * PLEASE NOTE: Individuals who enrolled in a state retirement program after January 1, 1980 may be members of the Teachers’ Pension System or the Employees’ Pension System. If you participate in either of these plans, click here. If you are uncertain which plan you are enrolled in, please contact the Employee Benefits Office.When you retire, you have several payment options to choose from.

Contributions to the SRPS

Each year, the State contributes a certain percentage of your salary to the SRPS, which is determined annually by the State System’s actuary. You must contribute a percentage of your annual salary according to the plan you’ve selected. There are three plans as follows:

Plan A: Member elected to pay a higher contribution rate (generally 7% of pay) to maintain all benefits, including the cost of living adjustments.

Plan B: Member continued pre-1984 contribution rate (generally 5% of pay) to maintain all benefits except unlimited cost of living. Cost of living adjustments are capped at 5%.

Plan C: Member chose a combination, or two-part (bifurcated) benefit. The portion of the service prior to the election is calculated at retirement as a Retirement System benefit; the portion of service after the election is calculated at retirement as a Pension System benefit.

Investment Management

Several professional investment managers who are selected and monitored by the Board of Trustees of the SRPS invest the assets of the SRPS. Any investment losses or funding shortfalls are the responsibility of the State of Maryland.

Benefit Calculation

Your retirement benefit is calculated using the following formula:

Total years and months of creditable service TIMES average final salary DIVIDED BY 55 EQUALS Annual allowance (Divide by 12 for basic monthly allowance)

Retirement Benefit Eligibility

Benefits are available through normal, early, vested, or disability retirement.

Normal Retirement

You may retire with unreduced benefits:

at any age with 30 years of creditable service,
at age 60 regardless of service

Vested Retirement

Former employees may receive benefits if they were vested (had at least 5 years of eligibility service) when they terminated employment. Your benefit is calculated using your total creditable service at termination. A vested allowance is payable at age 60.

Disability Retirement

There are two types of disability retirement benefits — ordinary and accidental. To qualify for ordinary retirement, you must be permanently disabled and have at least five years of eligibility service. Accidental disability benefits are paid if you are permanently and totally disabled as the direct result of a job-incurred injury.

Ordinary Disability Benefit

The basic benefit is computed using the service retirement formula, with a minimum benefit equal to 25% of the average final salary. This means that your benefit is computed as a service retirement benefit without reduction. If you choose one of the optional allowances, the benefit will be less.

Accidental Disability Benefit

Unlike ordinary disability, accidental disability does not make use of the normal service retirement formula. The accidental benefit is based on two-thirds of an employee’s average final salary at the time of disability, plus an annuity based on the member’s contributions. If you choose one of the optional allowances, the benefit will be less.

Early Retirement

The requirement for early retirement under the Retirement System is a minimum of 25 years of service, regardless of age. If you opt for early retirement you will receive a smaller monthly benefit. The reduction is 6% for each year the payment begins 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 of each month that payment begins early. If you are in the Teachers’ Retirement System, the reduction for service is .006 for each month prior to 30 years service or age 60.

Survivor/Death Benefits

If you die after retirement, your benefit will be determined by the payment option you selected. If you die as a former employee eligible for a vested benefit, your contributions are paid in a lump sum to your designated beneficiary (ies) or estate. If you die before retirement, your designated beneficiary(ies) or estate will receive:

a lump-sum benefit equal to your contribution plus interest, and
a lump sum equal to 100% of your salary if you had at least one year of service, or died in the performance of duty.

Your surviving spouse may have a choice of selecting a monthly retirement benefit instead of the lump-sum payments described above, provided:

you were eligible to retire under normal or early retirement,

you were at least age 55 when you died, had 15 or more years of creditable service, AND named your surviving spouse as your sole primary beneficiary.

You may change beneficiaries at any time before retirement by submitting the applicable change form to your Campus Benefits Counselor.

How Benefits Are Paid

You have several payment options from which to choose. You may choose to receive monthly payments throughout your lifetime with all benefits ending when you die. This option is called the basis allowance and provides the maximum monthly benefit for you alone. Under this option there is no beneficiary benefit. You may select an option that reduces your monthly benefit but provides varying degrees of protection for your beneficiary(ies). You may choose one of the following options:

Option 1 Provides a lower monthly benefit than the Basic Allowance, but guarantees monthly payments that equal the total of your retirement benefit’s Present Value. The Present Value of your benefit is figured at the time of your retirement. If you die before receiving monthly payments that add up to the Present Value, the remaining payments will be paid in a lump sum to your designated beneficiary or beneficiaries who remain alive. For state employees: Option 1 does not provide for continued beneficiary health coverage after your death.
Option 2 guarantees that at your death your entire monthly benefit will continue to be paid to your beneficiary for the remainder of their lifetime. Payments end upon the death of your beneficiary.
Option 3 guarantees upon your death that your beneficiary receives 50% of your monthly benefit for the remainder of their lifetime. Payment ends upon the death of your beneficiary.
Option 4 guarantees a return of your contributions with interest. If you die before receiving the full guaranteed amount, the remainder is paid in single lump sum to your beneficiary(ies).
Option 5 guarantees upon your death that your beneficiary receives your entire monthly benefit for their lifetime. However, if your beneficiary dies before you, your reduced benefit is increased to the amount you would have received if you elected your basic allowance.
Option 6 guarantees your surviving beneficiary a lifetime monthly benefit equal to 50% of your monthly benefit. However, if your beneficiary dies before you, your reduced benefit is increased to the amount you would have received if you elected the basic allowance.
Special Option 7 allows you to “personalize” your benefit to meet your specific needs. The Board of Trustees must approve all personalized options.

Cost-of-Living Increases

When you retire under the SRPS program, you may receive a cost-of-living (COLA) increase to your retirement benefit. The amount is based on increases in the average Consumer Price Index, All Urban Index, as determined by the U.S. Department of Labor. Members of the Retirement System receive a compounded COLA, meaning the increase is calculated on the sum of their initial benefit, plus the previous years’ increases. COLA limits vary among the three plans. Plan A has no cap (unlimited) and Plan B has a 5% cap. Plan C (bifurcated plan) has a two-part calculation. The portion paid out under the old system is unlimited, or it will have a 5% cap, depending on whether the selected plan was Plan A or B. The portion paid out under the new system has a 3% cap. You will receive your cost-of-living increase each July 1. You must be retired for at least one full year, as of the initial July 1 date, to be eligible to receive the increase. Otherwise, the increase will commence the following July 1.