Fairfax County pension eligibility changes explained
as explained by Louise Epstein, 11/18/2018
If you look at page 15 of the Employee Handbook:
The base benefit is the average final compensation (e.g., $84K) x the years of service (e.g., 30) x 2%, with a 3% kicker, or $51,912 per year.
Under the current ERS, the retiree gets an extra "pre-social security benefit" equal to 1% x (average final compensation up to Social Security breakpoint) x (years of service) x 1.03. For an employee whose final average salary was $84K, that would be about $25K/year. So, this employee would start getting pension checks for about $77K per year.
However, the extra $25K/year in pre-Social Security benefit would cease when the person became eligible for unreduced social security benefits - e.g., at age 67. But, the retiree would start receiving Social Security, which would approximately equal the pre-Social Security benefit.
The forementioned 3% kicker is on the chopping block, along with the pre-Social Security benefit, also is on the chopping block, and there seems to be consensus among the Supervisors that both should be eliminated. There also appeared to be consensus about basing the pension on the average of 5 years instead of 3 years.
Other good proposals were taken off the table by the Supervisors this past spring. The rules about when a newly-hired County employee could begin receiving full pension payments, however, were still in play as of June 2018. The unions were willing to let the Supervisors raise the minimum retirement age from 55 to 60, but were dead set against switching from the Rule of 85 to the Rule of 90. The more fiscally prudent supervisors -- from both parties -- thought pensions should not start being paid until the person both satisfied the Rule of 90 and also was at least 60 years old.
The three bullets below illustrate how these pension eligibility changes would work.
Under the Rule of 85, a County employee who starts working for the County at age 22 can retire with a full pension at age 53.5, if they work 31.5 straight years for the County. That's because 31.5 (years of service) + 53.5 (attained age) = 85. However, the pension would not start being paid until they turned 55, because the County also requires them to be age 55.
Under the Rule of 90, a County employee who starts working for the County at age 22 can retire with a full pension at 56, if they work 34 years for the County. That's because 34 (years of service) + 56 (attained age) = 90. However, the Supervisors also are proposing to increase the minimum retirement age to age 60. If they do, this employee who retired at age 56 wouldn't start receiving the full pension until age 60.
[In the interim, he might work for FCPS from age 57 to age 65. This employee would start receiving a large ERS pension based on 34 years of service to the County at age 60. If he retired from FCPS at age 65, the two small pensions from VRS and ERFC (based on 8 years of service) would kick in. At age 67, the pre-Social security benefit would terminate, but he'd start receiving Social Security.]
Under the Rule of 85 or the Rule of 90, an employee who started to work for the County at age 57 can retire and start receiving a County pension at age 65. However, the amount of their annual County ERS pension benefit is based on 7 years of service. However, this same individual could have worked for FCPS from age 22 to age 56, in which case he would be entitled to a full FCPS pension starting at age 60 (while he was working for the County). At age 65, he would be receiving the full FCPS pension (VRS + ERFC), and also would start receiving a small County ERS pension (based on 7 years of service). At age 67, he also would start receiving Social Security, on top of the large VRS pension, the medium-sized ERFC pension, and the small ERS pension.
I hope these examples clarify how these pension benefit formulas and eligibility rules work.
Please attend the Public Hearing on Pension Reform -- on Nov 20, 2018 at 4:30pm -- at Fairfax County Gov't Center - Board Auditorium, 12000 Gov't Center Parkway, Fairfax, VA
-- Louise