Permanent, full-time and part-time employees, with the exception of part-time school bus drivers, must join the South Carolina Retirement Systems or the Optional Retirement Plan. Part-time school bus drivers and temporary employees may choose whether to join. Membership starts when you begin earning compensation from a covered employer and you begin making contributions to the system.
The South Carolina Retirement System (SCRS) is a defined benefit plan. In a defined benefit plan, the state bears the investment risk and provides a guaranteed monthly pension based on a statutory formula, not on your account balance.
THE STATE OPTIONAL RETIREMENT PROGRAM
The State Optional Retirement Program (State ORP) is a defined contribution plan. In a defined contribution plan, you invest your funds within the plan’s investment choices and then bear the risk, or enjoy the benefit, based on the performance of your investments. Your retirement benefit is based on the balance in your account when you retire.
Eligible employees have an opportunity to select the retirement plan that best meets their specific retirement needs. Employees have 30 days from their date of hire to make a decision. If an employee does not make a selection, he or she will automatically become a member of SCRS, the defined benefit plan. The choice an employee makes between the two retirement plans offered will affect his or her financial and retirement income security. Employees must complete enrollment forms for either plan.
You contribute a tax-deferred 6.5 percent of gross pay into your retirement account each month. If you have not retired, your account earns 4 percent interest compounded annually on your balance as of the previous June 30th. All SCRS retiree earnings, including those of Teacher and Employee Retention Incentive (TERI) program participants, will be subject to the same contribution rate as active members.
Retiree contributions will be posted to your retirement account; however, as a retiree (including TERI participants – effective July 1, 2005) you will not earn additional service credit or receive interest on your deferred contributions. The district contributes an amount equal to 8.05 of the employee’s gross salary.
SCRS members whose membership began on or after January 1, 2001, must have five years of earned service to be eligible to apply for a service or disability retirement annuity.
Establishing Additional Service Credit
While you are an active member, you may establish credit for various types of service including previous employment, leave of absences, and up to five years of non-qualified service.
Leaving Before Retirement
If you terminate active employment, you may choose to have the funds paid directly to you, roll over the funds into an Individual Retirement Account (IRA), a 401(k) plan, a 401(a) eligible plan, a 403(b) plan, or some 457 plans, or leave your contributions in your retirement account to continue to accrue interest. If you terminate employment with at least five years of earned service and leave your contributions in your account, you will be able to receive a reduced deferred annuity at age 60.
Refund of Contributions
If you terminate employment, you may request a refund of your employee contributions plus interest, but you forfeit your rights to any future service retirement or disability annuity. You are not required to withdraw your contributions and interest at termination. Employer contributions are not refunded to SCRS members. By law, there is a minimum 90-day waiting period from your date of termination until a refund can be made.
The Retirement Systems is required to withhold federal taxes of 20 percent on the taxable portion of any refund that is not transferred directly into another qualified retirement plan. Other taxes may apply as well. Check with an accountant or tax advisor regarding your tax liability.
Service Retirement – When to Apply
Service retirement applications may be filed as early as six months prier to your desired effective date of retirement but no later than 90 days afterward. Contact the Benefits Office at 873-2901 for more information.
Service Retirement Eligibility
Normal Retirement (unreduced annuity)
· Age 65 with five years of earned service; or 28 years of service credit, five of which must be earned service.
Early Retirement (reduced annuity)
· Age 60 with at least five years of earned service. Your annuity is permanently reduced 5 percent for each year old age less than 65; or
· Age 55 or older with 25 years of service credit, five years of which must be earned service. Your annuity is permanently reduced 4 percent for each year of service credit less than 28.
Any active member of the South Carolina retirement system who has twenty-eight years of service may take advantage of the state’s TERI (Teacher and Employee Retention Incentive) program. TERI allows an employee to retire and begin accumulating retirement benefits without terminating employment with the district. Eligible employees may select to participate in the TERI program for up to five years by giving notice on their retirement application. During these five years, employees receive a tax-deferred accrual of retirement benefits, which is put into an escrow account for the employee. Interest is not accrued during this period. The employee is able to draw his or her regular paycheck during the TERI period less regular employee deductions.
While a member of the TERI plan, the employee will retain regular employment rights. Upon joining the plan, employees will be paid for up to ninety days for unused sick days at the district’s pre-determined rate. Any days in excess of ninety days for which the employee is paid will be retained by the employee while he or she participates in the TERI plan. During the TERI plan, sick and personal leave will begin to accumulate again; however, employees will not be compensated for these leave days upon termination of the plan. Employees will be paid for up to a maximum of forty-five days accrued annual leave upon exiting the TERI plan. Members of the TERI plan will receive cost of living raises if other employees receive them. A TERI employee does not earn service credit and is not eligible to receive disability retirement benefits. Employees who are part of the TERI plan will continue health, dental, dependent life insurance and optional life insurance through payroll deduction. When the employee leaves the TERI program, he or she would have thirty-one days to complete the paperwork necessary to convert health, dental, and optimal life benefits to retiree status. An employee may participate in the TERI program one time only.
Upon termination of the TERI plan, employees may elect to receive their escrowed money in taxable, lump-sum distribution, or they may choose to roll over their money into a tax-sheltered plan for which they qualify. Employees will then begin receiving their monthly service retirement benefit. Upon the untimely death of a TERI participant, a designated beneficiary chooses either a lump sum distribution or a tax sheltered rollover plan for which he or she is eligible.