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WHEN MAY I RETIRE? You may elect a service retirement if you have at least 30 years of credited service; or, if hired after January 1, 1996, 30 years of service and 55 years of age; or, if you are age 60 or older and have at least 10 years of credited service; or, if you are age 65 or older and have at least 8 years of credited service. An actuarially reduced service retirement benefit may be elected at any age with 25 or more years of service. Please see Question 4 for early retirement details. When you retire you are entitled to a straight life retirement allowance each month for as long as you live. Instead of a straight life retirement allowance you may elect, at the time you retire, to be paid an alternative retirement allowance, which will provide benefits as long as either you or your beneficiary live. Please see Question 5 for alternative details. HOW IS RETIREMENT SERVICE CREDIT EARNED? A month of retirement service credit is earned if you have been paid for eighty hours of work during a month. With the exception of the final year of employment a full year of retirement service credit is credited provided you have earned a minimum of nine (9) months service during a calendar year. In the calendar year of your final year of employment you will only be credited with the actual number of months served.
HOW IS THE AMOUNT OF MY RETIREMENT ALLOWANCE COMPUTED? Your service retirement allowance is based on your years of credited service, your age and your average final compensation. "Average final compensation" means the average of the annual compensation paid you by the City during the period of 36 consecutive months of service which produces the highest average. The 36 consecutive months used must occur within your last 120 months of service. You have the option of receiving an Unused Sick Leave on Retirement payout of 25% of your unused sick leave (normally 50%) and having the value of the payout added to the earnings used to compute your average final compensation.Your retirement allowance consists of the following 3 amounts: 1. A basic pension of $12 for each full year of service, but not to exceed $120.2. A pension allowance equal to the sum of 1.6% times your first 10 years of credited service, plus 1.8% times each year of service greater than 10 years up to 20 years, plus 2.0% times each year of service greater than 20 years up to 25 years, plus 2.2% times each year of service over 25 years; multiplied by your average final compensation. 3. An annuity, provided you made contributions for it and you do not withdraw those funds at the time of retirement. The annuity portion depends on the balance in your account and your age on your retirement date. TYPICAL ESTIMATED MONTHLY STRAIGHT LIFE RETIREMENT ALLOWANCE
(Based on Basic Pension of $120 plus 1.5% for lst 10 years of service, plus 1.7% for 11 to 20 years of service, plus 1.9% for service over 20 years)
WHAT IF I ELECT THE EARLY RETIREMENT OPTION? If you elect the early service retirement option, your benefit will be actuarially reduced based on your age at early retirement and the age at which you would have been eligible to retire under regular retirement provisions. TO ILLUSTRATE: You are age 50 with 25 years of service. Your straight life retirement allowance based on 25 years of service was computed to be $1,000.00 per month. However, you are receiving benefits 5 years early (you need 30 years of service for a regular retirement benefit). Your early retirement straight life allowance would be $634.10 per month. If you elect the early service retirement option, you are not eligible for fringe benefits (Hospitalization, Dental, Optical) until your 30th anniversary. You may, however, continue these benefits through the City of Detroit C.O.B.R.A. program at your cost. See the chart below for examples of early retirement allowances based on several combinations of age.
Back to top A STRAIGHT LIFE RETIREMENT ALLOWANCE PROVIDES ME WITH PAYMENTS FOR LIFE. A. CAN I PROTECT A BENEFICIARY BY ELECTING SOME OTHER FORM OF PAYMENT? Yes. You can provide lifetime protection for your designated option beneficiary by electing an alternative retirement allowance, with or without the Pop-Up Option, at the time you retire. You cannot change your election or your option beneficiary after you retire. JOINT AND 100% SURVIVOR ALLOWANCE: If you select this option, you would receive an actuarially reduced retirement allowance for as long as you live, with the added provision that upon your death, the option beneficiary designated by you, at the time of retirement, would begin to receive 100% of your reduced retirement allowance for the remainder of their life.
TO ILLUSTRATE: You are age 60 with a straight life retirement allowance of $1,000 per month. Your designated option beneficiary is also age 60. Your reduced retirement allowance would be $834.35 per month, payable as long as either you or your designated option beneficiary survive. JOINT AND 75% SURVIVOR ALLOWANCE: If you select this option, you would receive an actuarially reduced retirement allowance for as long as you live, with the added provision that upon your death, the option beneficiary designated by you, at the time of retirement, would begin to receive 75% of your reduced retirement allowance for the remainder of their life. TO ILLUSTRATE: You are age 60 with a straight life retirement allowance of $1,000 per month. Your designated option beneficiary is also age 60. Your reduced retirement allowance would be $870.39 per month. Upon your death, your beneficiary would receive $652.79 per month until their death. JOINT AND 50% SURVIVOR ALLOWANCE: If you select this option, you would receive an actuarially reduced retirement allowance for as long as you live, with the added provision that upon your death, the option beneficiary designated by you, at the time of retirement, would begin to receive 50% of your reduced retirement allowance for the remainder of their life. TO ILLUSTRATE: You are age 60 with a straight life retirement allowance of $1,000 per month. Your designated option beneficiary is also age 60. Your reduced retirement allowance would be $909.69 per month. Upon your death, your beneficiary would receive $454.85 per month until their death. JOINT AND 25% SURVIVOR ALLOWANCE: If you select this option, you would receive an actuarially reduced retirement allowance for as long as you live, with the added provision that upon your death, the option beneficiary designated by you, at the time of retirement, would begin to receive 25% of your reduced retirement allowance for the remainder of their life. TO ILLUSTRATE: You are age 60 with a straight life retirement allowance of $1,000 per month. Your designated option beneficiary is also age 60. Your reduced retirement allowance would be $952.71 per month. Upon your death, your beneficiary would receive $238.18 per month until their death. See the chart below for examples of reduced retirement allowances, based on several combinations of age. SAMPLE COMPUTATIONS Joint and 100% Survivor Allowance Joint and 75% Survivor Allowance Joint and 50% Survivor Allowance Joint and 25% Survivor Allowance BASED ON A $1,000 STRAIGHT LIFE RETIREMENT ALLOWANCE
CAN I PROTECT MYSELF IN CASE MY BENEFICIARY PREDECEASES ME? Yes. If you select a Joint and Survivor retirement allowance, you may also select a Pop-Up Plan. The Pop-Up Plan allows the retiree to automatically change to the Regular Option (Straight Life) amount should the option beneficiary predecease the retirant. JOINT AND 100% SURVIVOR ALLOWANCE WITH POP-UP: If you select this option, you would receive an actuarially reduced retirement allowance for as long as you live, with the added provision that upon your death the option beneficiary designated by you, at the time you elect Pop-Up, would begin to receive 100% of your actuarially reduced retirement allowance for the remainder of their life; however, if your beneficiary predeceases you, your benefit would automatically change to the straight life amount. TO ILLUSTRATE: You are age 60 with a straight life retirement allowance of $1,000 a month. Your designated option beneficiary is also age 60. Your actuarially reduced retirement allowance would be $820.40 per month with Pop-Up, payable as long as your designated option beneficiary survives. If your beneficiary predeceases you, your benefit would automatically change to the straight life amount of $1,000 a month.JOINT AND 75% SURVIVOR ALLOWANCE WITH POP-UP: If you select this option, you would receive an actuarially reduced retirement allowance for as long as you live, with the added provision that upon your death the option beneficiary designated by you, at the time you elect Pop-Up, would begin to receive 75% of your actuarially reduced retirement allowance for the remainder of their life; however, if your beneficiary predeceases you, your benefit would automatically change to the straight life amount. TO ILLUSTRATE: You are age 60 with a straight life retirement allowance of $1,000 a month. Your designated option beneficiary is also age 60. Your actuarially reduced retirement allowance would be $858.97 per month with Pop-Up, payable as long as your designated option beneficiary survives. If your beneficiary predeceases you, your benefit would automatically change to the straight life amount of $1,000 a month. JOINT AND 50% SURVIVOR ALLOWANCE WITH POP-UP:If you select this option, you would receive an actuarially reduced retirement allowance for as long as you live, with the added provision that upon your death the option beneficiary designated by you, at the time you elect Pop-Up, would begin to receive 50% of your actuarially reduced retirement allowance for the remainder of their life; however, if your beneficiary predeceases you, your benefit would automatically change to the straight life amount. TO ILLUSTRATE: You are age 60 with a straight life retirement allowance of $1,000 a month. Your designated option beneficiary is also age 60. Your actuarially reduced retirement allowance would be $901.34 per month with Pop-Up, payable as long as your designated option beneficiary survives. If your beneficiary predeceases you, your benefit would automatically change to the straight life amount of $1,000 a month. JOINT AND 25% SURVIVOR ALLOWANCE WITH POP-UP: If you select this option, you would receive an actuarially reduced retirement allowance for as long as you live, with the added provision that upon your death the option beneficiary designated by you, at the time you elect Pop-Up, would begin to receive 25% of your actuarially reduced retirement allowance for the remainder of their life; however, if your beneficiary predeceases you, your benefit would automatically change to the straight life amount. TO ILLUSTRATE: You are age 60 with a straight life retirement allowance of $1,000 a month. Your designated option beneficiary is also age 60. Your actuarially reduced retirement allowance would be $948.11 per month with Pop-Up, payable as long as your designated option beneficiary survives. If your beneficiary predeceases you, your benefit would automatically change to the straight life amount of $1,000 a month. See the chart below for examples of actuarially reduced retirement allowances with the Pop-Up Option, based on several combinations of age.
SAMPLE COMPUTATIONS Joint and 100% Survivor Allowance Joint and 75% Survivor Allowance Joint and 50% Survivor Allowance Joint and 25% Survivor Allowance BASED ON A $1,000 STRAIGHT LIFE RETIREMENT ALLOWANCE
Your Defined Contribution Plan (Annuity Savings Fund) balance consists of your contributions and interest credited on those contributions. You have the following choices when you retire:
Each of these options has tax consequences and, therefore, you should consult with your tax advisor prior to making your selection.
MAY I WITHDRAW ALL OR A PORTION OF MY DEFINED CONTRIBUTION PLAN (ANNUITY SAVINGS FUND) BALANCE PRIOR TO MY RETIREMENT? Employees with twenty-five (25) years of credited service may withdraw, one time only, all or part of their Defined Contribution Plan (Annuity Savings Fund) balance. Employees awarded a Duty or Non-Duty Disability Retirement may also withdraw, one time only, all or part of their Defined Contribution Plan (Annuity Savings Fund) balance. Employees who withdraw all or part of their Defined Contribution Plan (Annuity Savings Fund) balance should consult with their Tax Advisor with respect to the taxability of amounts withdrawn. CAN I COORDINATE MY RETIREMENT ALLOWANCE WITH MY SOCIAL SECURITY BENEFIT? Yes. If you retire before age 65, you may elect the Social Security coordination option. Under this option, you would be paid an increased allowance until you become eligible to receive Social Security benefits at either age 62 or 65, and a reduced retirement thereafter. TO ILLUSTRATE: You are age 60 with a projected retirement allowance of $1,000 per month and an estimated Social Security benefit at age 62 of $680 per month. Your monthly retirement income until age 62 will be $1,000. When you begin to receive a Social Security benefit at age 62, your estimated monthly income could increase to $1,680 ($1,000 plus $680). You could level the amount of your monthly income by electing the Social Security coordination option at the time you retire. Under this option, your retirement allowance until age 62 could be increased to $1,550. At age 62, your estimated retirement allowance would be decreased to $870. The sum of your reduced estimated retirement allowance ($870) and your estimated Social Security benefit ($680) could be $1,550 which is the same estimated amount you were receiving before age 62, so your monthly income should remain level.
WHAT IF I BECOME TOTALLY AND PERMANENTLY DISABLED? If you are granted a duty connected disability retirement and you are under the age of 60, you would receive a disability allowance consisting of a pension computed at two thirds of the average final compensation at date of disability, but not to exceed $9,000 per year ($5,700 per year if retired prior to January 1, 1999), plus an annuity allowance based on your annuity balance on the effective date of disability.At the age of sixty or with 30 years of service credit (30 years & age 55 if hired after January 1, 1996), the disability allowance would end, and you would then receive a retirement allowance consisting of an annuity (assuming that you have elected to contribute to the Defined Contribution Plan) (Annuity Savings Fund) which you would have received had you continued to work at the pay level of your final compensation, at your annuity percentage in effect the previous June 30, and a pension based on the years that you worked for the City the years that you were on the duty disability roll. Medical coverage is available with the payment of appropriate co-pays. If you are granted a non-duty connected disability retirement, have ten or more years of credited service, and, you are under the age of sixty, you will receive a disability allowance consisting of a pension computed in the manner of a service retirement pension but limited to a maximum of $6,000 per year ($3,900 per year if retired prior to January 1, 1999), and, an annuity allowance based on your annuity balance on the effective date of disability (assuming that you have elected to contribute to the Defined Contribution Plan) (Annuity Savings Fund). At age sixty, the disability allowance is recomputed as a service retirement allowance; however, no credit is given for the years you were receiving the non-duty disability allowance. Medical coverage is available with the payment of appropriate co-pays.Upon retirement at the age of sixty, or with 30 years of service (30 years & age 55 if hired after January 1, 1996) all disability recipients can choose either a straight life retirement allowance or a Joint and Survivor retirement allowance. WHAT IF I DIE BEFORE RETIRING? If you have twenty years of service, regardless of age, or are over age 60 with ten years of service, or if you are age 65 or older and have at least 8 years of credited service, and you die a non-duty death, your surviving spouse will receive a lifetime allowance. This allowance would be computed on the assumption that you actually retired and had selected the Joint and 100% Survivor Allowance to protect your spouse, who may also choose to receive a lump sum payment of your Defined Contribution Plan (Annuity Savings). Dependent children may be eligible for benefits until age 19 if there is no surviving spouse. If you die under age 60 with less than twenty years of service, your designated beneficiary will receive any amount contributed by you toward your Defined Contribution Plan (Annuity Savings Fund), plus accrued interest. Duty disability retirants with twenty or more years of credited service at time of death, and, non-duty disability retirants with twenty or more years of actual service at time of disability also qualify for this actuarially reduced retirement allowance for the surviving spouse. IF I SEPARATE BEFORE MY RETIREMENT ELIGIBILITY, DO I RECEIVE A PENSION? If you separate from City employment after age 40, and were hired by the City before July 1, 1980 with at least 8 years of service, or, were hired by the City July 1, 1980, or later, and have at least ten years of service, you are eligible for a Vested Retirement Allowance. (Non-Union employees hired between July 1, 1980 and March 29, 1992 may choose either of the above methods). This pension is based on years of service and average final compensation computed at the time of resignation. Payment will begin upon attaining eligibility. Should you die before you are eligible to begin drawing your Vested Retirement Allowance, your spouse is not eligible for any allowance. They would, however, receive any balance in your Defined Contribution Plan (Annuity Savings Fund) plus interest earned in a lump sum upon request. If you do not meet the requirements for a Vested Retirement Allowance, you or your designated beneficiary will be paid your accumulated contributions, including interest earned until the June 30th following your separation, in a lump sum upon request. Employees eligible for a Vested Retirement Allowance should notify the Retirement Systems whenever they change addresses so that notice of Retirement Eligibility is sent to the appropriate location and Retirement collection begins on a timely basis.
WILL I GET 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 time credit as if your service was uninterrupted, provided you return to City service after completing military duty within the period of time prescribed by law. You will not make contributions while you are in military service, but interest will continue to be credited to your accumulated contributions. A new employee may purchase pre-employment military service credit for up to three years of Honorable Military Service served 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 or .4167% for each full month. 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. IS MY RETIREMENT ALLOWANCE SAFE?Yes. The Michigan State Constitution provides that each year of service must be funded and makes pensions and retirement allowances a contractual obligation of the City and will not allow the City to decrease benefits. In addition, the City Charter and a City Council Ordinance provide for proper funding. The Retirement System is administered by a Board of Trustees composed of the Mayor, a member of the City Council, the City Treasurer, a retiree elected by the retirees, a citizen, and five members elected by City employees (no two from any one department) who represent you and protect your retirement benefits. WHO PAYS FOR RETIREMENT SYSTEM BENEFITS? As a member of the Retirement System, you are eligible to participate in two plans:
The Board of Trustees of the Retirement System is responsible for the proper operation of the Retirement System. Investment of all Retirement System assets (which consist of the assets of the Defined Benefit and Defined Contribution plans) are made by the Board of Trustees as authorized by State Law. It is Board policy to prudently invest pension funds so that the highest return is attained among the safest investments. To assist in carrying out these responsibilities, the Board utilizes the services of Investment Advisors who make recommendations to the Board of Trustees regarding investments in accordance with the authority and limitations provided by law.
IS PROVISION MADE FOR INCREASED LIVING COSTS AS A RESULT OF INFLATION AFTER I AM RETIRED? Yes. Your pension portion only will be increased 2.25% of the original pension amount at retirement on each July lst. For example, if your original pension amount at retirement was $1,000 per month, each July 1st the allowance would increase by $22.50 per month (2.25% of $1,000). If you elect an actuarially reduced allowance, your beneficiary would continue receiving a proportional share of the annual July 1st increase after your death. ARE RETIREMENT BENEFITS SUBJECT TO FEDERAL, STATE OF MICHIGAN OR LOCAL INCOME TAX? Defined Benefit (Pension) Plan. Generally, only federal income tax will be a factor when you receive benefits from the Defined Benefit (Pension) Plan. Pension benefits are currently exempt from the City of Detroit and the State of Michigan income taxes. Prior to your retirement you will be given withholding forms relative to each plan. Unless you fill out the form instructing the Board of Trustees how much to withhold, tax will be withheld in accordance with current Federal Law. Your tax obligation will depend on the federal, state and local income tax laws in effect when you retire. You should consult your tax advisor with respect to your individual tax matters. Defined Contribution (Annuity) Plan. If you elect a full or partial lump sum refund, you will be subject to tax on interest earnings and you may be subject to pay additional taxes depending upon certain circumstances. The tax laws change from time to time. The Board of Trustees cannot and does not provide tax advice. You should obtain this advice from your own tax advisor so as to be aware of your tax obligations and consequences. SUPPOSE MY SPOUSE AND I DIVORCE BEFORE 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 among the involved parties under an Eligible Domestic Relations Order (EDRO). You should consult with your attorney concerning Public Act 46 of 1991. IF I AM COVERED BY A COLLECTIVE BARGAINING AGREEMENT, IS THERE ANY EFFECT UPON MY RETIREMENT SYSTEM BENEFITS? Your collective bargaining agreement may contain retirement benefit provisions which are applicable to you. In the event the Retirement benefit provisions in your collective bargaining agreement are different from the Retirement System provisions found in the City Charter and Ordinances and which provisions were submitted to the Internal Revenue Service, the terms of your collective bargaining agreement are controlling; provided they do not diminish constitutionally protected rights and benefits. Be sure to review your collective bargaining agreement and consult with your union representative if you have any questions. WHEN I BEGIN MY SERVICE RETIREMENT, WHAT HAPPENS TO THE FRINGE BENEFITS I CURRENTLY RECEIVE UNDER THE EMPLOYEE BENEFIT PLAN? 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. 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 System Office with a letter from the Social Security Administration if you are not eligible for Medicare. Survivors entitled to retirement benefits are generally entitled to the same fringe benefits as their spouse. You must notify the Benefits Department when you reach 65 years of age. Death Benefit Plan If a retiree has a minimum of ten years of service, at a cost of $1.08 per year, the retiree may choose to be insured for $1,680. This benefit is increased by $84 for each year of service, in excess of ten (10) years. The Death Benefit Plan is administered by the Trustees of the Employees Benefit Plan. Life Insurance Upon retirement, you may arrange to convert your group term life insurance policy to a regular individual policy. The current carrier of group term coverage for City employees is the John Hancock Insurance Company. Dental Program Retiree and spouse are eligible for dental coverage. Current carriers are Blue Cross and Golden Dental. Optical Program Retiree and spouse are eligible for an optical program currently administered by Heritage Optical. IF I CHOSE A JOINT AND SURVIVOR ALLOWANCE OPTION, IS MY BENEFICIARY ENTITLED TO FRINGE BENEFITS? Spouses receiving Joint and Survivor Allowances are entitled to fringe benefits (Hospitalization, Dental and Eye Care) that the employee received. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||