Hybrid Retirement Plan
The Hybrid Retirement Plan combines the features of a defined benefit plan and a defined contribution plan. The plan applies to most members hired on or after January 1, 2014.
- The defined benefit portion of the benefit is based on a formula using your age, creditable service and average final compensation at retirement. Under the defined benefit component of the Hybrid Retirement Plan, the retirement multiplier to be used on service earned, purchased or granted on or after January 1, 2014, is 1.0%.
Average final compensation × retirement multiplier for the plan × total years of creditable service at retirement
= Annual benefit amount ÷ 12 =Monthly benefit amount before taxes and other deductions
- The defined contribution portion of the benefit is based on the contributions made to the plan and the investment performance of those contributions.
- In addition to the monthly benefit payment payable from the defined benefit plan at retirement, you may start receiving distributions from the balance in your defined contribution account, reflecting the contributions, investment gains or losses, and any required fees.
Your retirement benefit is funded through mandatory and voluntary contributions made by you and your employer to both the defined benefit and the defined contribution components of the plan. Mandatory contributions are based on a percentage of your creditable compensation and are required from both you and your employer. Additionally, you may choose to make voluntary contributions of more than the mandatory amount to the defined contribution component of the plan, and your employer is required to match those voluntary contributions according to specified percentages.
Unreduced Retirement Eligibility
Under the defined benefit component of the plan, you become eligible for an unreduced retirement benefit when you reach your normal Social Security retirement age and have at least five years (60 months) of creditable service, or when your age and service equal 90. For Example: Age 60 with 30 years of creditable service.
For the defined contribution component, you are eligible to receive distributions upon leaving employment, subject to restrictions.
Defined Benefit Vesting is the minimum length of service you need to qualify for a future retirement benefit. You are vested under the defined benefit component of the Hybrid Retirement Plan when you reach five years (60 months) of creditable service.
Defined Contribution Vesting is the minimum length of service members need to be eligible to withdraw employer contributions from the defined contribution component of the plan. You are always 100% vested in the contributions that you make.
Upon retirement or leaving covered employment, you are eligible to withdraw a percentage of employer contributions. Distribution is not required by law until age 70½.
- After two years, you are 50% vested and may withdraw 50% of employer contribution.
- After three years, you are 75% vested and may withdraw 75% of employer contributions.
- After four or more years, you are 100% vested and may withdraw 100% of employer contributions.
Benefit Calculation Examples
Assumption - the member is retiring at age 60 with 30 years of creditable service (1%). The member’s average final compensation is $50,000.
- Average final compensation $50,000
- Retirement multiplier × .01
- Creditable service earned 30 years
- Annual benefit amount based on 1.0% = $15,000÷
- 12 months ÷ 12
- Monthly benefit amount before taxes and other deductions = $1,250+ 30 years of defined contributions
HYBRID PLAN RESOURCES
VRS RETIREMENT SYSTEM - PLAN 1 AND PLAN 2
Full-time and part-time C, D and M-scale employees hired after July 1, 2001 and prior to January 1, 2014, and A, E, G, P, T, X-scale employees and Extended Day Supervisors who work at least half-time automatically are members of the VRS. As of July 1, 2012, members of VRS pay a pre-tax 5.0% contribution as determined by the State. Membership is mandatory for employees in covered positions. Members are vested in the system after five years service.
Plan 1: At the time of retirement for employees in Plan 1 (service credit prior to July 1, 2010), the amount of the annuity to which the retiree is entitled is calculated based on the retiree's 36 highest consecutive months of salary, the retiree's years of service under the VRS and the retiree's age at the time of retirement (age 50 with at least 10 years service credit or age 55 with at least 5 years service credit).
Plan 2: For employees in Plan 2, the amount of the annuity to which the retiree is entitled is calculated based on the retiree's 60 highest consecutive months of salary, the retiree's years of service under the VRS and the retiree's age at the time of retirement (minimum age 60 with at least five years of service).
Health Insurance Credit: A, E, G, P, T, X-scale employees and Extended Day Supervisors who retire with 15 or more years of VRS service are entitled to receive a credit of $4.00 per month for each year of VRS service (not to exceed the individual premium amount) to defray their health insurance premium costs.
VRS Customer Contact Center: 1-888-VARETIR (1-888-827-3847)
VRS Web site: https://www.varetire.org/myVRS/
Retirement quotes are available online through MYVRS.
VRS MemberNews newsletter is now only published online. To view the Spring 2012 issue click here
. To view the latest VRS MemberNews letter click here.
Questions to our Benefits Retirement Specialist: 703-228-8627
Click Here for the September 2014 Issue Of Member News
Arlington County Employees Retirement System (ACERS)
A, E, G, P, T- scale employees and Extended Day Supervisors hired before February 1981 are covered by VRS and by Chapter 35 of the Arlington County Employees Retirement System.
C, D and M-scale employees hired before February 1981 are covered by Chapter 21 of the Arlington County Employees Retirement System. Full-time and part-time maintenance, custodial, transportation and cafeteria employees, and 27-hour Extended Day Aides, who were employed after February 1981 and before July 1, 2001, and who opted not to be covered by VRS, are members of Chapter 46 of the Arlington County Employees' Retirement System (ACERS). ACERS members contribute 4.0% of their salaries to the retirement system in pre-tax dollars and 1.0% pre-tax to a 457 plan with TIAA-CREF.
Like VRS, at the time of retirement, the annuity to which a retiree is entitled is calculated based on the retiree's thirty-six highest consecutive months of salary, the number of years of service under the system, and the age at the time of retirement.
Questions to our Benefits Retirement Specialist: 703-228-8627