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You may retire when you have at least 25 years of credited service regardless of age. Credited service is the total number of years, months and days of active service a member accumulates for pension purposes toward retirement. When you retire, you will be paid a straight life retirement allowance each month for as long as you live. Or, at the time you retire, you may choose an Option II or Option III retirement allowance which will provide lifetime benefits to you and upon your death will continue throughout the life of your designated beneficiary. HOW IS THE AMOUNT OF MY STRAIGHT LIFE RETIREMENT ALLOWANCE COMPUTED?Your retirement allowance is based upon your years of credited service and your average final compensation. Hired prior to 1-1-69 (OLD PLAN)Your total retirement allowance (pension plus annuity) is equal to two and one/half percent (2.50%) of your average final compensation multiplied by your years of credited service, not to exceed twenty five years. The pension portion cannot exceed fifteen/twenty-seconds (15/22) of the maximum earnable compensation of a patrolman/firefighter. Average Final Compensation is the average of the "maximum rate of pay" fixed by the budget, at the time of your termination, of your rank or ranks held during your last five years of service. Members hired prior to 1-1-69 also have the option to retire under the "New Plan" provisions which follow. Hired on or after 1-1-69 (NEW PLAN)Your total retirement allowance (pension plus annuity) is equal to two and one/half percent (2.50%) of your average final compensation for the first 25 years of credited service and two and one/tenth percent (2.10%) for years beyond 25 to a maximum of 35 years of service. Average final compensation is the same as under the "Old Plan". NOTE: When you retire, if you withdraw or have already withdrawn your accumulated Defined Contribution Plan (Annuity Savings Fund) in a lump sum, your total retirement allowance will be reduced. Yes, you can provide lifetime financial protection for your beneficiary by choosing Option 2 or Option 3. This choice must be made when you retire. You cannot change the option of your beneficiary after you cash a retirement check. The amount of an Option 2 or Option 3 retirement allowance is based upon the amount of your straight life retirement allowance and the age of you and your beneficiary. These amounts decrease with increasing age, for the same reasons that insurance premiums increase with increasing age. When you choose Option 2 or Option 3, in a sense you are paying monthly insurance premiums to provide a survivorship benefit for your beneficiary upon your death. The "premium" is the difference between the straight life amount to which you are entitled and the amount you receive under the optional payment plan. Therefore, the difference between the amount of your straight life retirement allowance and the amount of the Option 2 or Option 3 retirement allowance represents the cost of paying your beneficiary’s allowance. The value of each optional form of payment equals the actuarial value of the straight life retirement allowance; they all have the same cost to the Retirement System at the time you retire. The options are made available to you as a convenience in planning your personal retirement program. OPTION 2 – JOINT AND SURVIVOR ALLOWANCE Under this plan you would receive the Option 2 retirement allowance for as long as you live. Upon your death your beneficiary would receive 100 percent of the Option 2 annual retirement allowance for life. EXAMPLE: You are age 55 and are entitled to a straight life allowance of $12,000 per year. Your named beneficiary is also age 55. From the table below, your annual Option 2 retirement allowance would be $10,416 (12 times $868). You would receive monthly benefit checks for as long as you live. Upon your death, your beneficiary would receive the same amount monthly for life. OPTION 3 – MODIFIED JOINT AND SURVIVOR ALLOWANCE You would receive the Option 3 retirement allowance for as long as you live. Upon your death, your beneficiary would receive 50 percent (one-half) of your Option 3 retirement allowance for life. EXAMPLE: You are age 55 and are entitled to a straight life allowance of $12,000 per year. Your beneficiary is also age 55. From the table below, your annual Option 3 retirement allowance would be $11,148 (12 times $929). You would receive monthly benefits checks for as long as you live. Upon your death, your beneficiary would receive one-half (1/2) of your benefit each month for life. Option 2 - 100% Survivor Allowance Option 3 - 50% Survivor Allowance (Based on $1,000 Straight Life Monthly Retirement Allowance) Age at Retirement Back to topCAN I NAME SOMEONE OTHER THAN MY SPOUSE AS MY BENEFICIARY? You may name as your beneficiary any person with an insurable interest in your life. Once you have named a beneficiary and cashed a retirement check, you are not allowed to change your beneficiary selection. WHAT IS THE BEST PENSION OPTION TO CHOOSE? At your retirement interview, the Retirement System staff will explain each retirement option available to you. Only you can decide which is the best option for yourself. Changes to your retirement option are not allowed after you cash any pension check. Back to topWHAT IS THE "POP - UP" OPTION? The "Pop-Up" Option is a retirement option that you may elect which allows for your retirement to be changed from Option II or Option III to a Straight Life Option in the event your beneficiary predeceases you. The cost for this option is borne by the retiree or his/her beneficiary. There are three Pop-up Options from which a retiree may choose. Your monthly pension benefit is subject to Federal Income Taxes only. Public retirement pension benefits are currently not subject to State of Michigan or City of Detroit income tax. WHAT IF I BECOME TOTALLY AND PERMANENTLY DISABLED?
If your disability is approved by the Board of Trustees as being duty related and you have less than 25 years of service, your disability allowance will consist of two parts: 1. A basic benefit of 50% of your final compensation on your effective date. 2. A supplemental benefit of 16.67% of your final compensation on your effective date. If after two years on disability and prior to your 25th anniversary, you are deemed able to perform the duties of any occupation for which you are suited, based on education, training and experience, the supplemental portion of your benefit will cease. When you have attained 25 years of credited service, the supplemental portion of your benefit will cease. Conversion – Upon termination of disability after completing 25 years of service or attainment of age 65, your disability benefit will convert to a service retirement benefit. The amount of your service benefit will be the same amount which would have been payable if the conversion from duty disability had occurred at the date of your attaining 25 years of service or your date of separation, whichever is later, plus applicable retirement allowance increases. Any Worker’s Compensation payments are offset from your duty disability retirement benefits.NON-DUTY RELATED DISABILITY RETIREMENT You can receive a retirement allowance for a non-duty related disability if you have five or more years of credited service. Your disability retirement allowance is computed in the same manner as a regular service allowance with a minimum allowance of 20 percent of your average final compensation. If you have less than five years of credited service at the time of your non-duty disability retirement, your Defined Contribution Plan (Annuity Savings Fund) will be returned to you, or at your option, you may select a cash refund annuity which shall be the equivalent of your accumulated contributions, including interest. Any Worker’s Compensation payments are offset from your City retirement disability benefits. If you have less than twenty-five years of service and retire with either a Duty Disability or Non-Duty Retirement, your Defined Contribution Plan (Annuity) monies cannot be withdrawn. Duty: Your contributions continue to accrue interest at the same rate as active uniform employees until your 25th anniversary, at which time you can elect to withdraw your monies. Non-Duty: Your total monthly benefit is paid from your annuity contributions if you select Straight Life, Option 2 or Option 3. If you select an Option 1 benefit, only the annuity portion of your benefit is paid from your annuity contributions. If any contributions remain on your 25th anniversary, you may elect to withdraw the balance at that time.
ARE DISABILITY BENEFITS OFFSET BY OUTSIDE EARNINGS? You can earn the difference between your gross disability benefits and your base salary at the date of disability, increased by 2.25% times the number of full years from the date of disability to the year in which the earnings offset is applied. Any earnings above this amount are offset dollar for dollar from your disability benefit. Back to topWHAT IF I DIE BEFORE RETIRING? If you die from duty related causes, your designated beneficiary will receive your accumulated contributions, including interest, in a lump sum. Your spouse will receive a monthly pension equal to five-elevenths (5/11) of the maximum pay for the rank of patrolman or firefighter, as the case may be, for life or until remarriage. Each unmarried child under 18 receives one-tenth of the maximum pay with a maximum total of seven thirty-thirds (7/33)of the maximum pay. The total of all pensions paid cannot exceed two-thirds (2/3) of the maximum pay. If there is no eligible spouse, unmarried children under 18 receive one-fourth (1/4) of the maximum pay with a maximum total of one-half (1/2) of the maximum pay. If there is no eligible spouse or children, dependent parents receive one-sixth (1/6) of the maximum pay. Your spouse may also elect to receive a benefit as computed under survivors benefit in lieu of a duty death benefit. If you die from non-duty related causes and have less than 25 years of credited service, your spouse will receive a survivors benefit allowance for life or until remarriage, computed as a regular retirement allowance but reduced for an Option 2 election. The amount of the allowance is based upon your credited service and average final compensation at the date of your death. The minimum allowance is 20 percent of your average final compensation. Each unmarried child under 18 receives one-seventh (1/7) of the maximum pay for the rank of patrolman or firefighter, as the case may be, to a maximum of two-sevenths (2/7) of the maximum pay. If there is no eligible spouse or children, dependent parents receive one-seventh (1/7) of the maximum pay. If there is no eligible spouse, children, or dependent parents, the balance of your accumulated contributions, if any, will be paid to your designated beneficiary or to your estate if there is no designated beneficiary. If you die from non – duty related causes and have more than twenty-five years of credited service, benefits for your spouse are computed identical to the above with the exception that the benefit does not terminate with remarriage. Any Worker’s Compensation payments are offset from your City duty or non-duty retirement system allowance. IF I RESIGN BEFORE MY RETIREMENT AGE, WILL I STILL RECEIVE AN ALLOWANCE? You would be eligible to receive an allowance providing that at the time of your resignation you:
Vested Pension Benefit A retirement allowance based on your years of credited service and your average final compensation will be effective on the date that you would have been eligible to retire had you continued in the employment of the City (DPOA & Fire Equivalents hired on or after July 1, 1985 shall not be eligible for pension benefits until they reach their sixty – second(62) birthday). If you die before you are eligible for your retirement allowance, your beneficiary is not eligible for an allowance. If you retire with a 40 & 8 vested pension benefit, you can withdraw your Defined Contribution Plan (Annuity) monies immediately. REDUCED EARLY PENSION BENEFIT You may elect a reduced early pension benefit in lieu of a deferred benefit. The value of the reduced early pension benefit is the actuarial equivalent of a 40 & 8 pension. You have 90 days after your resignation to elect the reduced early pension benefit. Fringe benefits (Hospitalization, Dental, Eye Care, Death Benefit) for vested and reduced early retirees begin on the date the member would have been eligible to retire had they continued in the employment of the City (DPOA & Fire Equivalents hired on or after July 1, 1985 are not eligible until they reach their sixty – second (62)birthday). If you resign and do not meet the requirements for a vested or early reduced retirement allowance, you will be paid your accumulated contributions, including interest, in a lump sum upon request. Processing your refund takes approximately six to eight weeks after you are removed from the active payroll. Back to topCAN I OBTAIN MY DEFINED CONTRIBUTION PLAN (ANNUITY) BALANCE OVER THE PHONE? Your balance may only be obtained in person or by written request to the Retirement Office. An annual statement of your account balance is mailed to you at the end of each fiscal year. WHEN CAN I WITHDRAW MY DEFINED CONTRIBUTION PLAN (ANNUITY) MONIES You may withdraw your Defined Contribution Plan (Annuity) monies upon termination of employment or upon completion of twenty-five years of service. You may apply up to sixty days prior to eligibility. The refund process takes about 6-8 weeks after the last deduction is taken from your check.
HOW IS THE INTEREST RATE ON MY DEFINED CONTRIBUTION PLAN (ANNUITY) MONIES DETERMINED? After each fiscal year, the total earnings of the Retirement System, less expenses, are divided by the total mean balances of all the Reserve Accounts to calculate the interest rate to be used. Effective July 1, 1998, interest on accumulated balances is compounded weekly rather than yearly. Back to topWILL I RECEIVE CREDIT FOR MILITARY SERVICE? Yes, if you are granted a leave of absence to enter the military while you are employed by the City, you will be given service credit as if your service was uninterrupted. This provision requires that you return to City service after completing military duty within the period prescribed by law. You will not contribute to the retirement fund while you are in military service, but your accumulated contributions will continue to earn interest. A new employee may purchase pre-employment military service credit for up to three years of Honorable Military Service during the periods December 8, 1941 to July 1, 1946, June 27, 1950 to December 31, 1953 or August 5, 1964 to May 7, 1975. A new employee must apply within 180 days from the date of hire. The cost would be 5% of the employee’s annual rate of pay for each full year of service credit. Pre-Employment Military Service Credit cannot be used to qualify for earlier retirement. It can only be used to increase the amount of pension benefit you will receive upon retirement. WHO PAYS FOR RETIREMENT SYSTEM BENEFITS?Your retirement allowance is made up of two parts: a Defined Benefit Plan (Pension) and a Defined Contribution Plan (Annuity). Defined Benefit Plan. The Defined Benefit Plan is a plan funded by Employer Contributions and earnings from the assets of the system. The City contributes actuarially computed amounts required to maintain the System as required by the Constitution of the State of Michigan.Defined Contribution Plan. This plan is also referred to as the Annuity Savings Plan; which is a program which requires you to contribute toward an annuity. The Defined Contribution Plan is funded by employee contributions and earnings from the assets of the System. Defined Contribution Plan monies belong solely to each employee or upon death, to their named beneficiary. WHO ADMINISTERS THE RETIREMENT SYSTEM?The Police and Fire Retirement System is administered by an eleven member Board of Trustees as follows: Three Policemen who are members of the System. Two to be elected by and from members holding the rank of Lieutenant and lower. One to be elected by and from members holding ranks above Lieutenant. Three Firemen who are members of the System. Two to be elected by and from members holding the rank of Lieutenant and lower. One to be elected by and from members holding ranks above Lieutenant. The Mayor or his/designee, the President of the City Council, or a member thereof elected by City Council, the City Treasurer, or the Deputy City Treasurer, the Chief of Police, or his designee and the Fire Commissioner, or his designee are ex-officio members. IS SOME PROVISION MADE FOR INCREASED LIVING COSTS AS A RESULT OF INFLATION AFTER I AM RETIRED? Hired prior to 1-1-69 (OLD PLAN) Yes. Your retirement allowance increases proportionately with the increases in active member pays of the rank on which your retirement allowance was computed. This also holds true for retirement allowances paid to beneficiaries. Hired on or after 1-1-69 (NEW PLAN) Yes. The pension portion of your retirement allowance increases two and one-quarter (2.25%) percent of your original retirement allowance each year on July 1st. This also holds true for retirement allowances paid to beneficiaries. IS MY RETIREMENT ALLOWANCE SAFE?Yes. Under the provisions of the State of Michigan’s Constitution, the City of Detroit has a contractual obligation to fund pensions and retirement allowances for each employee’s entire service period. The City Charter and a City Council ordinance mandate proper funding of the Police and Fire Retirement System. The Trustees, as fiduciaries, work to protect and increase the assets of the system. The system currently compares very favorably to other Public Retirement Systems across the country. HOW IS RETIREMENT SYSTEM MONEY INVESTED? The Board of Trustees of the Police and Fire Retirement System establishes the objectives and guidelines which govern investment policy. All investments are made in accordance with the City Charter and State Statutes governing the investment of pension funds. The System employs the services of nationally known and respected investment consulting and management firms who advise the Board on portfolio selection and asset allocation. All funds and securities of the Police and Fire Retirement System are kept entirely separate from the funds of the City.
HOW DO I APPLY FOR RETIREMENT? To apply for retirement. Follow these steps:
Hospitalization and Medical Insurance The City will continue to pay the cost of hospitalization insurance, in accordance with Collective Bargaining Agreements and City Council Resolutions in effect at the time of retirement, for yourself and your spouse. After age 65, if you are eligible for Medicare, the City will provide a supplement to your Medicare benefits. The City requires that you enroll in Parts A and B of Medicare if you are eligible by Medicare rules. You must supply the Retirement Office with a letter from the Social Security Administration if you are not eligible for Medicare. You must notify the Benefits Division of the Human Resources Department when you or your spouse reach 65 years of age. Death Benefit Plan If a retiree has ten years of service, or less, at a cost of $1.08 per year, a retiree may choose to be insured for $1,200. This benefit is increased by $60 for each additional year of credited service. Life Insurance Upon retirement, you may arrange to convert your group term policy to a regular individual policy. The current carrier of group coverage for City employees is the John Hancock Insurance Company. Dental Program Retiree and spouse are eligible for dental coverage currently administered by Bankers Life & Casualty. Optical Program Retiree and spouse are eligible for an optical program currently administered by Bankers Life & Casualty. SUPPOSE MY SPOUSE AND I DIVORCE BEFORE OR AFTER I RETIRE, ARE MY BENEFITS AFFECTED? If your accrued retirement benefits are included as a marital asset in a divorce property settlement, the courts can allocate the marital portion of your pension and/or annuity among the involved parties under an Eligible Domestic Relations Order (EDRO). You should consult with your attorney concerning Public Act 46 of 1991.
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