Q: What are qualified retirement wages?
A: Qualified retirement wages are generally salary or wages earned and paid for the performance of an employee’s duties, including regular longevity or incentive plans approved by the Retirement Board. These wages typically do not include overtime payments.
Q: How much are employers required to contribute to the retirement plan?
A: Each year, the actuarial firm hired by the State Retirement Board determines a percentage of payroll, or employer contribution rate, necessary to properly fund required benefits. A different employer contribution rate is determined for state employees, teachers and each participating municipality (including police and fire plans).
Under the Rhode Island Retirement Security Act of 2011 (RIRSA), most employers will also be required to contribute to the defined contribution plan for their employees. Employer DC contribution rates are:
State employees: One percent
Teachers: One percent (additional two percent for teachers without Social Security)
Municipal employees (general): One percent (additional two percent for employees without Social Security)
Municipal (Police and Fire): Three percent for employees without Social Security
Correctional officers, judges and State Police: None
Q: When should payroll data and contributions be submitted to ERSRI?
A: Contributions and data must be sent to ERSRI each month, and are payable by the 15th of the month following payroll. For example, if payroll is made on Jan. 31, contributions and data are due by Feb. 15.
Q: What happens if an employer is late in making a contribution?
A: Consistent with Rhode Island General Law, the General Treasurer’s Office is authorized to withhold state aid to communities that do not make timely contribution payments.
Q: We’re interested in adopting a cost of living adjustment (COLA) for our employees. What should we do?
A: To offer a COLA to employees, the employer’s overseeing legislative body (Town Council, Board of Governors, etc.) would have to adopt a resolution indicating the type of COLA it would like to offer. Once the resolution is adopted, ERSRI will provide the employer with the new employee and employer contribution rates, as well as the effective date for these rates. Note: On Nov. 18, 2011, the Rhode Island General Assembly enacted the Rhode Island Retirement Security Act of 2011 into law. Under the new law, COLAs will be paid out every five years after June 30, 2012, to be determined by the five-year average investment rate of return, and will be between zero and four percent. This means that the payment of COLAs will be directly linked to the fund’s investment rate of return. Any COLA scheduled to be paid on or before June 30, 2012 will be paid. However, beginning July 1, 2012, COLAs will be paid on the new schedule at the new rate, and only on the first $25,000 of the member’s benefit. Once the pension fund is 80% funded, COLAs will be paid annually to members on the first $25,000 of the member’s benefit, and will continue to be linked to the actual investment rate of return.
Q: Are there different types of disability benefits?
A: Yes. “Ordinary” disability benefits are provided when the member’s disability is independent of his or her employment. “Accidental” disability is provided when an employee is physically or mentally incapacitated by a disability that is causally related to his or her employment.
Q: When should an employee who is applying for a disability pension terminate his or her employment?
A: An employee who is considering applying for a disability retirement must apply to ERSRI for the disability prior to terminating his or her employment (even if the employee is currently collecting workers’ compensation). Once an employee has terminated employment, he or she cannot apply for a disability. There are no exceptions to this rule.
Q: Can an employer hire or re-hire a retired employee?
A: Yes, but post-retirement employment with the state of Rhode Island, Rhode Island public schools or any Rhode Island municipality participating in MERS is subject to restriction in accordance with Rhode Island General Laws. Generally, employment may begin no earlier than 45 calendar days after an employee retirees, and a retiree cannot go back to work for the state of Rhode Island without suspension of his or her pension benefit. The following rules also apply to post-retirement employment:
- ERSRI or MERS retirees may work for a participating municipality for no more than 75 working days or 150 half-days in a calendar year.
- ERSRI or MERS retirees may substitute teach for a period of not more than 90 days or 180 half-days in any one school year (A school year is generally Sept. 1 through Aug. 14th, but may vary by department).
- Retirees may be hired to fill a vacant teaching position, including coaching or tutoring, for not more than 90 days if the school department certifies, in writing, that it has made a “good faith” effort to fill the position with a non-retired person.
- ERSRI or MERS retirees may be employed by a state college, university or state school for the purpose of providing classroom instruction, academic advising of students and/or coaching. Gross wages may not exceed $18,000 in any one calendar year.
- Retired registered nurses may be employed on a per-diem basis to provide nursing care/service at a state facility for no more than 75 working days or 150 half-days in any one calendar year.
No additional contributions will be taken and no additional service credits will be granted for post-retirement employment.
Employers are legally obligated to send notice of employment monthly to ERSRI. This notice must be signed by both the employer and the retired employee. The post-retirement employment notification form can be found here.
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