1. What do I contribute to my pension?
As an employee of the State of Delaware, you contribute a certain percentage of each paycheck to the State's pension fund. As of January 1, 2000, all employees contribute at the same rate: 3% of that portion of your monthly compensation which exceeds $6,000 per year.
2. What does my employer contribute to my pension?
The State and your local district contributes the rest of your pension, each proportionate to its share of your salary. The state and local school district contribute approximately 7.07% of its total payroll into the Pension Trust Fund as of July 1, 2006.
3. When can I retire? -What are my retirement options?
You are eligible to receive a pension from the State of Delaware with any of the following combinations of years of service and age:
1) with 30 years of service credit - at any age;
2) with 15 years of service credit - at age 60;
3) with 5 years of service credit - at age 62;
4) with 25 years of state service - with reduced pension, at any age (Your pension will be reduced by 0.2% for each month under 30 years of creditable service.);
5) with 15 years of state service - with reduced pension, at age 55 (Your pension will be reduced 0.2% for each month you are under age 60 when you retire.);
6) with 20 or more years of credited service, including 15 years of state service - at age 60 if first employed prior to July 1, 1976;
7) with 10-19 years of state service, provided termination of employment occurred between 7/1/76 and 6/30/88 - pension payable at age 62;
8) with five or more years of state service, provided termination of employment occurred on or after 6/30/88 - pension payable at age 62; or
9) if you become disabled, and you haven't already chosen the new short-term insurance disability program, you may draw a disability pension based on your years of service if you have at least five years of state service, not counting any claimed or purchased service other than service for sabbatical leave and military service (interrupting employment).There are no penalties assessed with a disability pension.
A new Disability Insurance Program was enacted into the Delaware Code in the 144th General Assembly. This disability program provides 75% of salary for short-term disability and 60% of salary for long-term disability. Each year on disability gives a year of service credit toward a normal retirement. Disability may continue until age 65 before a normal retirement takes place.
4. How do I accrue pension credit?
You accrue pension credit if you are employed in a full-time or regular part-time job which requires at least 50 hours per month; or you earn at least $200 per month; or you work at least two and a half hours per day.
Yes, school employees who are employed for the school year do receive twelve months of pension credit if they complete the entire school year. Substitute teachers, however, do not accrue pension credit because they are considered casual and seasonal employees.
5. Can I get pension credit in Delaware for the time I taught in another state?
Yes, but you have to buy it. If you were hired in Delaware AFTER 1976, then you can only buy up to five years, and you pay the actuarial cost, which can be very expensive.
If however, you were hired before July 1, 1976, the cost is 5% of your Final Average Compensation for each month credited up to a maximum of 48 months, or four years.
For example, if your annual FAC is $36,000, a "buy-in" of two years would be calculated as follows:
$36,000 (annual FAC) divided by 12 = $3,000 x .05 = $150 x 24 months = $3,600. Service credit buy-ins such as this are payable at the time of retirement.
6. What about other governmental service or credit for more than four years of out-of-state teaching? Can it count towards my creditable service time?
Yes. But, like the above, it must be purchased. You may purchase up to five years of credit for full-time employment performed for another state, the federal government, an accredited private school or college, or service with the State of Delaware for which you will not be receiving another pension. The amount you pay is equal to the actuarial value of the credits purchased. The State Pension Office will be able to counsel you on the cost of such a purchase. This credit does not apply towards pension eligibility, only for additional benefit.
7. Do I get credit toward a state pension for my military service time? If you were hired before July 1, 1976, you receive service credit, up to five years, for full-time active duty in the Armed Forces of the United States during war or national emergency. However, you must have become an employee within five years after completion of your tour of duty or after completion of a course of professional or vocational training (if such course was begun within five years of completion of your tour of duty.) The educational program must be full-time, continuous and leading to a certificate, diploma or degree.
If you are called into active service or volunteer for active service in the Armed Forces or the National Guard of the state while you are an employee of the state, and if you return to your employment in the state, you will receive full credited service for such continuous military service.
If you do not qualify for the above, you may purchase up to five years of credit for full-time duty in the Armed Forces by paying into the Plan an amount equal to the actuarial value of the credits purchased. The credits so purchased do not count for pension eligibility, only for extra pension.
8. Will I be able to buy service credit for teaching time in a foreign school or a private school in Delaware? You may purchase up to four years of pension credit for time as a full-time employee of any accredited private school or college, i.e., one which is recognized by the Department of Public Instruction when you come to Delaware and are put on the state salary schedule at a level which recognizes the time spent in the foreign school. This does not include part-time employment as a graduate teaching assistant or any employment after you retire. To be eligible to purchase this credit, you must have been hired before July 1, 1976.
Once again, the cost is 5% of your monthly FAC for each month that you buy.
You may not purchase more than a total of ten years of credit for military service, other governmental service or professional educational employment.
9. Will I get pension credit for a medical leave I took? Again, you may purchase credit for medical leave (including maternity leave) of up to one year. For this credit you must pay an amount which will be determined by the State Pension Office at the time you retire (the employee and employer share of the pension contributions). Again, the credit purchased cannot be used to determine eligibility for a pension.
10. Can I buy credit for a personal leave? Yes, personal leave buy-ins are subject to the same conditions as medical leaves described above.
11. Will I receive free pension credit for sabbatical leave? Yes, if you are a professional educational employee certified by the Department of Education.
12. Will I receive pension credit while out on Worker's Compensation? Yes, generally. Please call the State Pension office to discuss specific situations.
13. Can I use accrued vacation toward my pension? Yes, if you are eligible to receive payment for your accrued leave, you can elect to use the time for both eligibility and computation of your pension benefit.
14. May I choose to get paid for my accumulated sick days at retirement? You will be paid for half of up to 90 days of accumulated sick leave time. This money is paid to you through your school district at the time of retirement. This money will only be paid at time of an actual retirement and will not be paid at the time a vested person leaves state service. This only involves the state share of salary unless the local has bargained for the local share also. There is a provision to buy up to one year of service credit for accumulated sick leave beyond 90 days by paying 5% of your FAC.
15. If I fail to complete the entire school year, will I lose pension credit for the summer months? The percentage of the summer lost will be proportionate to the amount of the school year worked. If you worked half of the regular year, you would receive credit for half of the summer.
16. How will a break in service affect my creditable service? If you have less than five years of service with the State when the break in service occurs, you will have to return to State service and work at least five continuous years before your previous credit will be restored.
17. If I am "riffed," how will this affect my pension? Assuming you don't apply to have your pension contributions refunded to you, if you are released from employment for reasons other than cause or voluntary withdrawal, you will have all your pension rights restored if you are re-employed by the State or a local school district within two years. If you have less than five years of service when riffed and you do not return to State or school district service within two years, you will have to work for five continuous years before your pension rights are restored.
18. When I am retired, am I guaranteed regular post-retirement pension increases?
There is no statutory requirement for increases. As of 1993, the General Assembly established a fund for future pension increases. Increases have been given for twelve out of the last thirteen years.
19. Is there a pension for my surviving spouse? If you die while actively employed and have acquired five years of credited service, not counting any claimed or purchased time other than that which was purchased for sabbatical leave and military service (which interrupt employment), your eligible survivor will be paid a survivor's pension beginning the month following your death.
Your eligible survivor will receive 75% of your age 62 entitlement, based on the assumption that the larger benefit would have been elected by the deceased, effective June 1, 1989.
If you die while receiving a service or disability pension, the pension payable to your eligible survivor(s), beginning the month following your death, will be equal to one-half of the pension you would have been eligible for at age 62.
You may elect to decrease your own state pension by 3% in order to increase your eligible survivor's pension to 75% instead of 50% of your monthly pension amount (effective July 1, 1989). This is a decision you must make at the time you retire. It is irrevocable.
Special rules apply if your surviving spouse is under age 50. The survivor's pension will be actuarially reduced for each month he or she is under 50. However, this reduction will not apply for any period in which your surviving souse is caring for an unmarried child or children, either under age 18 or between 18 and 22 and attending school on a full-time basis, or over age 18 but permanently disabled before age 18.
The following lists the priority of survivors unless you change the priority by filling out a form with the Pension Office:
- surviving spouse;
unmarried child or children either under age 18 or between age 18 and 22, and attending school on a full-time basis, or over age 18 but permanently disabled before age 18;
- dependent parent who was receiving one-half of his or her support from you at the time of your death.
If there is no eligible survivor, the balance of your contributions that have not been paid out in retirement benefit will revert to your named beneficiary or your estate.
20. Are there any differences in pension credit or eligibility for education support personnel?
Educational Support Personnel accrue pension credit the same ways other state employees do.
There is a minimum pension of one dollar per month per year of service.
If your pension is computed under the old formula which was in place prior to July, 1976, including some service time prior to June 1970, or you first entered State service after May 1970 - but prior to July 1976 - the minimum pension payable (provided you have 15 years of state service) is your monthly FAC or $150 per month, whichever is less.
If your pension is computed under the old formula which was in place prior to July, 1976 and you do not have fifteen years of state service, or you first entered state service after May 1970 but prior to July 1976, the minimum pension payable is five dollars per month multiplied by our years of service up to a maximum of thirty years.
If you are a regular part-time public school cafeteria employee and you have at least fifteen years of earned credited service, including some service before July 1971, you shall receive, beginning at age 62, a minimum amount of $200 per month.
21. What benefits do I receive as a retiree?
You will receive health and a death benefit.
As a retiree you (or your beneficiary receiving a pension) are eligible for the same health care choices as an active state employee.Medicare eligible pensioners are entitled to Medicfill coverage, which is the supplement to Medicare. Retirees must sign up for Medicare Parts A & B to be eligible for free Medicfill coverage.
In 1991, the legislature passed a prorated schedule for health care benefits for state employees hired after July 1, 1991: 50% for those employed 10-15 years; 75% for those employed from 15 to 20 years; and 100% for those employed 20 years or more. This new law does not affect disability pensions.
If a pensioner moves out of state, he or she will have to select Blue Cross Blue Shield Coverage.
Each pensioner is also covered by a $7,000 (increased from $6,000 in 2001) free group life insurance policy. Survivors who are drawing a pension are also covered by $7,000 of death benefit (effective July 1, 2001).
22. How does Social Security work? DSEA encourages you to seek definitive information about Social Security benefits to which you are eligible directly from your local social security administration office. In Wilmington call 573-6535; in Dover, 674-3610; and in Georgetown, 856-6301. We are presenting here only generalized information.
The Social Security fund is financed by equal contributions from employees and employers. Social Security tax (FICA) is deducted from your pay. Your employer is required to match this contribution.
Your Social Security (SS) benefit is based on the earnings of your whole working career with the lowest five years of earnings dropped. Using Form SSA-7004PC, which is available from your local SS office, you can request a computerized statement of earnings every three years. DSEA encourages you to do this since you may not be able to have mistakes corrected after the three-year period is over.
As you approach retirement, this same form can be used to request an estimate of your SS benefit after retirement.
The spouse of an educational employee covered under SS is eligible for one half of the SS benefit at age 62, unless the spouse would make more by using his/her own SS account.
A non-employed spouse, for instance, would be eligible for an amount equal to one half of the covered spouse's SS benefit. Again, the covered employee must be 62 for the spouse to be eligible to draw on his/her account.
If you are a disabled state retiree and apply for a Social Security disability, you will find that the test is different: for Social Security disability, you must not be able to perform any type of gainful employment.
23. How does Medicare work? Anyone who is eligible for Social Security (and over age 65) is eligible for Medicare.
Medicare is a Federal health insurance program for people age 65 and older. The program has two parts, hospital insurance (Part A) and medical insurance (Part B). Hospital insurance is free, having been prepaid through part of your FICA tax contributions during your working years. It pays for in-patient hospital care and follow-up care.
Medical insurance is financed by monthly premiums from the retiree's SS check ($88.50/month in 2006). It pays for doctors' services and many other medical services and items.
If you are drawing SS, you will automatically be signed up for Medicare at age 65. If you are not yet retired, you should sign up for Medicare three months before reaching age 65.
If you decline Part B of Medicare (the medical insurance), you will only be able to sign up at future openings (January 1 through March 31 of each year) and, at that point, your monthly premium will be higher.
Beginning January 1, 1989, Medicare expanded to cover certain catastrophic health care costs. The new law limits the amount you must pay for hospital care; physician services; medical supplies; outpatient drugs; home-health, skilled nursing facilities; hospice coverage; breast cancer screenings; and respite care.
Participation in Part D of Medicare is not required of state employees because the state offers an equivalent or better pharmacy benefit.
24. What should I know about taxes during retirement? It's all good news... As noted in the beginning, after age 65 your personal exemptions on both state and federal taxes are increased whether you're retired or not.
As a retiree under age 60, you are eligible to receive a $2,000 exclusion from Delaware taxable income.
If you are a retiree age 60 or older, you are eligible to receive a $12,500 exclusion from Delaware taxable income in tax year 2000 and beyond.
If you are age 60 or older or disabled, and have earned income less than $2,500, you are eligible for a $2,000 exclusion from state income tax if your Federal and Delaware adjusted gross income does not exceed $10,000. This exclusion is $4,000 for a married couple (when both are over age 60) if earned income is less than $5,000 and the Federal and Delaware adjusted gross income does not exceed $20,000. One spouse may qualify for this separately, even if the other does not qualify and they use a joint return.
Your survivor is not subject to paying Delaware estate taxes on your state pension.
If you file a federal tax return as an "individual" and your combined income is between $25,000 and $34,000, you may have to pay taxes on 50% of your Social Security benefit. If your combined income is above $34,000, 85% of your Social Security benefit is subject to income tax. If you file a joint return, you may have to pay taxes on 50% of your benefit if you and your spouse have combined income that is between $32,000 and $44,000. If your combined income is more than $44,000, 85% of your Social Security benefit is subject to income tax.
25. If I leave state service, can I get back the contributions to the pension system that were deducted from my salary? Yes. You must call your local personnel office and ask them to send you the appropriate form. Payment will not be made until four months following your last pay period.
26. What interest will I be paid on my pension contributions should I decide to withdraw them? 5%
27. If I leave state employment, withdraw my contributions and subsequently return to state employment, can I have my previous pension credit restored? Yes, but you must repay the contributions withdrawn, plus interest, and, if not vested, you must work for five continuous years.
28. Am I required to retire at any age? No.
29. When is my pension vested? Vesting means that you have invested time as an employee and therefore you are eligible to receive a pension when you retire. Your pension will be vested when you have accumulated five years of service time without any breaks in service. In other words, you may leave state employment after five years and be eligible to receive some prorated amount of pension at age 62.
