­­Great questions come our way daily.  We thought we’d share one from a member that may be of interest to many of you who have wondered about whether missed workdays during the recent strike might impact your pension benefits.  The question also allows us to share with you how retirement service credit is determined and why it’s important.

Question from a Member:

Will the loss of three days of service impact my ability to qualify for benefits associated with reaching 62 years of age with 30 years of service milestone (known as “62 and 30”)?  Particularly if I plan to leave active service when I hit 30 years of service in five years and then draw my pension at age 62? I am concerned that a failure to hit either of the 62 or the 30 components would have a negative impact on my lifetime retirement benefits due to steeper early retirement reductions being applied.

 Short Answer:

In the case of the recent strike, the loss of 3 service days will not have any impact on your ability to achieve the 62/30 classification in the time frame you’ve mentioned in your question.  Under the circumstances you’ve described, the
retirement service credit component is the primary determinant for qualifying for 62/30 status.

 Deeper Dive Explanation:

In its simplest form, a member’s lifetime pension amount is mainly a function of the following factors:

1. Years of retirement service credit;
2. Final average salary (highest five consecutive years of fiscal year earnings);
3. Applicable multiplier;
4. Age-related reductions for retirement before the normal retirement age; and
5. The benefit option is chosen by the member.

Retirement service credit affects eligibility for benefits as well as the benefit amount.  SPTRFA members are eligible for retirement benefits after three years of service and attaining the age of 55.

The key factor in determining annual retirement service credit is the number of days worked in any fiscal year.  One year of retirement service credit is earned when a member works 170 days.  At a minimum, full-time members generally work 210 days in a fiscal year, effectively being credited with one year of retirement service credit by early May.  As a result, we expect that members with three days “lost” to the strike, would still earn one year of retirement service credit at the end of the fiscal year.  In fact, as of the April 10^th SPPS payroll, full-time members had already accumulated 157 days of retirement service credit (v. 160 days that they would have accrued without the strike). With only 13 days needed to reach the 170 days required for a full year of retirement service credit, we do not anticipate any issues for full-time members, nor any advantage for the majority of members to buy back the lost three days.

And, please note, while SPTRFA allows no more than one year of retirement service credit during any fiscal year, earnings are not capped and accrue to the last day worked in any given fiscal year.

Part-Time and Members on Leave:

What impact will lost days due to the strike have on members working part-time or on a leave of absence?

Retirement service credit is determined in relation to the full-time equivalent established for specific job classifications.  For a teacher, the full-time equivalent of 100 FTE = 210 days. Part-time members earn retirement service credit on a proportionate basis, with some examples, as follows:

1. 80 FTE = 168 days worked expected, with 0.98824 retirement service credit earned (210*.8 = 168 … 168/170 = .98824).
2. 60 FTE = 126 days worked expected, with 0.74118 retirement service credit earned.
3. 50 FTE = 105 days worked expected, with 0.61765 retirement service credit earned.

It should be noted that some members who work part-time often exceed the number of “days worked expected.” This results in the member earning one year of retirement service credit, despite the part time designation, as SPPS does not typically limit the member to an exact number of days worked even if designated part-time.  Additionally, members participating in a Part-Time Assignment program have the option of paying for full-time equivalency, thereby establishing a full year of retirement service credit and salary.  The Part-Time Assignment program is an employer-approved arrangement for up to ten years.

As well, members on qualifying leaves of absence have the option of paying for missed service, thereby increasing retirement service credit and fiscal year earnings.  Qualifying leaves of absence include: Family, Family Medical, Medical, Military, Mobility, Parental, and Sabbatical.  Leave of absence statements are sent each year in March / April for payment by June 30 of the current fiscal year. In the case of members working part-time or on a leave of absence, the calculation of retirement benefits and the impact of a strike are more individualized and facts and circumstances intensive.  We work to monitor these situations and are available to address any member question or concern. Please direct your inquiries to: INFO@sptrfa.org