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State Optional Retirement Program

 

Defined Contribution Plan

The State Optional Retirement Program (State ORP) is an alternative to the South Carolina Retirement System (SCRS) retirement plan. A variant of the current State ORP has been available to certain employees since 1987. Employees eligible for State ORP participation may choose between the State ORP, which is a defined contribution plan, or the traditional SCRS plan, which is a defined benefit plan.

Basic Information

What is State ORP?

State ORP is a 401(a) qualified governmental plan that provides an account into which both you and your employer contribute. Your retirement income is based on the account balance accumulated throughout your years of employment at the time you retire. Any distributions, investment gains or losses will affect this balance.  Your account balance is a combination of contributions, performance of the investment funds you select, and fees and expenses from the investment options offered through the State ORP’s investment providers.

How is this plan different from SCRS?

The South Carolina Retirement System (SCRS) is a defined benefit plan. In a defined benefit plan, the plan bears the investment risk and provides a monthly benefit based on a statutory formula. In State ORP, you invest your funds within the plan’s investment options and then you bear the risk, or enjoy the benefit, based on the performance of your individual investments. Your retirement income is determined by the balance in your account when you retire. Your retirement income ceases when you exhaust all of the funds in your account.

Who is eligible to enroll?

All newly hired state, public school, public higher education employees, and individuals first elected to the South Carolina General Assembly in and after November 2012 are eligible to choose between the South Carolina Retirement System (SCRS) and the State Optional Retirement Plan (State ORP). This includes all permanent full-time employees, temporary and part-time employees, and political appointees. You must select one of the two available retirement plans unless your position is exempted by state law. Your employer can tell you whether your position is exempt from mandatory membership. State ORP is not available to local government employees. Retired members are not eligible to join State ORP.

If you are actively enrolled with SCRS and hired by another employer covered by SCRS, you must participate in SCRS for all covered employment. If you are actively enrolled with State ORP and hired by another employer covered by State ORP, you must participate in State ORP for all covered employment.  

How do I enroll?

As a new employee, you have 30 days from your date of hire to make a retirement plan decision. If you do not make a selection within that time period, you will automatically become a member of SCRS by default. You must complete an enrollment form regardless of the plan you select. Your employer has the enrollment forms and can help with the enrollment process. The forms are also available on our website. The forms can be accessed here.

To enroll in State ORP, you must notify your employer that you wish to participate in State ORP. You will also need to let your employer know which one of the four authorized investment providers for State ORP you have selected and designate a beneficiary. If you wish to select a beneficiary other than your estate for the incidental death benefit available to active State ORP participants then you must also complete and submit a State ORP Active Incidental Death Benefit Beneficiary Designation (Form 1106).

Can I elect non-membership?

You must enroll in either SCRS or State ORP unless your position is exempted by state law from mandatory membership. Your employer can tell you if your position qualifies for non-membership. Individuals first elected to the South Carolina General Assembly in and after November 2012 may elect non-membership. If you are receiving monthly benefits as a retired member of SCRS and you return to covered employment, you must make contributions to SCRS as a working retired member. You are not eligible to elect non-membership if you already have funds on account with the Retirement Systems. If you are eligible to and choose to elect non-membership, you must complete and sign an Election of Non-Membership (Form 1104). Give your completed and signed form to your employer for submission. Your decision to elect non-membership is irrevocable.

Can I join SCRS after I have selected State ORP membership?

There is an open enrollment period (January 1 to March 1) during which a State ORP participant may select to irrevocably switch to SCRS if the participant has between one and five years of State ORP participation.

If, as a State ORP participant, you do not make the election to join SCRS within the allotted time, you will, by default, continue your State ORP membership and forfeit your opportunity to elect SCRS membership. If you join SCRS during the allotted time, you may purchase all or a portion of your State ORP service at any time after joining SCRS. The cost, which is determined by PEBA’s independent actuary, will not be less than 16 percent of your career highest fiscal year compensation for each year purchased. One of your payment options is to roll over the funds from your State ORP account into SCRS. Your State ORP account balance may be more, or less, than the amount required to purchase the service.

State ORP service that is purchased in SCRS is considered earned service for the determination of the SCRS minimum service requirement for benefit eligibility. Earnable compensation associated with State ORP service purchased in SCRS will also be considered for possible inclusion in the calculation of a member’s average final compensation (AFC) and any subsequent service purchase calculations.

What happens if I leave state employment?

Since there isn’t a vesting requirement, you have immediate rights to your State ORP account balance.  Your account balance is an accumulation of employee and employer contributions deposited into your State ORP account, investment gains or losses on those contributions, and fees and expenses allocated to your account. If you terminate employment, your State ORP investments remain in the investment products you select unless you request that they be transferred or rolled over to another eligible retirement plan, or unless that investment product is no longer offered. You can change jobs without losing your accumulated State ORP account balance. You may request a refund of your State ORP balance when you reach age 59 ½ or when you terminate employment. After receiving your refund from State ORP, you may participate in similar plans through other employers. You may also choose to roll over your account balance to another eligible retirement plan or an Individual Retirement Account (IRA) as allowed by the Internal Revenue Code (IRC).

 

Investments

How much do I contribute to my retirement?

The current employee contribution rate is a tax-deferred 8.0 percent of your gross pay, whether in SCRS or State ORP.  Employee contribution rates are established by state law as enacted by the South Carolina General Assembly.

How much does my employer contribute to my retirement?

By statute, your employer contributes five percent of your gross pay directly into your State ORP account. This contribution along with your contribution of 8.0 percent is deposited into your State ORP account with your chosen investment provider. 

How are investment decisions made?

You assume all investment risk. The director of the South Carolina Retirement Systems designates the professional money management companies (investment providers) authorized to offer investment products; however, you are responsible for your investment choices, distribution methods, and retirement goals.

You select from the available investment products to reach an appropriate asset allocation based on your individual investment objectives and retirement goals. The prospectus for each investment product provides information on that particular product. Investment provider service representatives are available toll free by telephone to assist with your selections.

Who are the vendors?

  • MassMutual
    Dolores Cadette-Branche
    Director, Relationship Management
    100 Bright Meadow Boulevard
    Enfield, CT  06082
    860-835-8403 (Office)
    800-528-9009 (Participant Services)
    www.retirement.massmutual.com/serve
  • MetLife Resources
    David A. Johnson, CLU, ChFC
    Workplace Sales Director
    11225 North Community House Road
    10th Floor, Office 10.630
    Charlotte, NC 28277
    980-949-4249 (Office)
    800-543-2520 (Participant Services)
    http://www.metlife.com/scorp
  • TIAA-CREF
    Carl H. Goodwin
    Managing Consultant
    Six Concourse Parkway, Suite 2600
    Atlanta, GA 30328
    800-842-2003 ext. 263524 (Office)
    404-915-5709 (Cell)
    770-399-5469 (Fax)
    800-842-2252 (Participant Services)
    cgoodwin@tiaa-cref.org
    http://www.tiaa-cref.org/scorp

  • VALIC
    Mandy Yelton
    SC District Administrative Assistant
    3710 Landmark Dr., Suite 104
    Columbia, SC 29204
    800-647-4416 (Office)
    803-782-9061 (Fax)
    800-448-2542 (Participant Services)
    mandy.yelton@valic.com
    http://www.valic.com/scstateorp

What are the investment products?

Each of the vendors for State ORP has prepared a table that shows general information and historical returns about each of the products being offered. Select the links below to view a specific vendor's product information.

Contact your choice of investment provider for more information on the investment products offered and a copy of a prospectus.

For information about investment product performance, please visit Plan Allocation, Vendor Fees, & Watch Lists.

What are withdrawal restrictions?

Each of the four authorized investment providers in State ORP has prepared a table summarizing the withdrawal restrictions on the investment products they offer in State ORP. Select the links below to view a specific vendor's withdrawal restrictions.

Can I choose a different vendor after I’ve made my initial selection?

There is an annual open enrollment period (January 1 to March 1) during which a State ORP participant may change investment providers.

What if I have a problem with my State ORP investment provider?

You or your employer should report any problems concerning the investment providers to the Retirement Systems.

What happens if I elect State ORP but don’t make my investment selections?

In the event that you do not select investment products from your chosen vendor during the enrollment process, your contributions will be invested in an approved default fund. State ORP has determined that the approved default funds are Target Maturity funds. For more information, please review “Default Fund Offering” on page two of the Investment Policy.

If I elect State ORP, can I change my investment options at any time?

Yes, but any changes to your investment options are subject to your State ORP investment provider’s contractual limitations as well as applicable fees and expenses. You may change investment providers, however, only during an annual open enrollment period (January 1 to March 1).

If I elect State ORP, can I allocate my contributions to more than one investment option?

Yes. The employee and employer contributions may be allocated to any of the authorized investment products offered by your chosen investment provider.

If I change State ORP investment providers, what happens to my account balance?

If you change investment providers during an annual open enrollment period (January 1 to March 1), you may transfer your account balance, subject to your State ORP investment provider’s contractual limitations, to the new investment provider. You may select to leave funds on account with your prior provider.

How does State ORP participation or SCRS membership affect supplemental defined contribution retirement plan contributions?

You may still contribute to a 457 or 401(k) deferred compensation plan, or to a 403(b) tax-sheltered annuity; however, your contribution limits and options may depend on the type(s) of supplemental plans you select. You may want to contact a tax consultant or a financial advisor for more information.

How will investment risk affect my retirement account?

Investment risk is the uncertainty of how a given investment will perform. In State ORP, if the investments you select perform well, your retirement account will grow quickly and provide more income when you retire. If your investments do not perform well, your account balance will not be as large.

The potential for higher returns is generally greater with investments that carry more risk. Diversifying your investments by allocating funds into several asset classes, such as bonds, large cap equities, international equities, and small cap equities, may help reduce your overall risk.

 

 

State ORP Plan Distributions

What are my distribution options?

Upon termination of employment, you may choose to purchase an annuity or take a lump-sum distribution or a partial distribution. Your State ORP account balance is based on the total accumulation of employee and employer contributions deposited into your State ORP account, investment gains or losses, and fees and expenses allocated to your account. State ORP investment providers offer a variety of retirement payment options designed to allow you to tailor your retirement plan to meet your financial needs.

In the event of your death, your beneficiary may receive the cash value of your account through annuities, lump-sum distributions, or periodic withdrawals.

How do I receive distributions at retirement?

There is no minimum age or years of service required for retirement. You become eligible to receive distributions when you terminate employment or reach age 59 ½. You may leave your balance on deposit to accumulate earnings tax-deferred until you elect to receive them or until you reach age 70½ at which time you are required by the IRS to begin receiving annual required minimum distributions.

Who can I name as my beneficiary?

You may name as many beneficiaries and/or trustees as you wish.

What in-service death benefits are available?

The distribution your beneficiary receives is based on the cash value of your account as of your date of death. Your beneficiary may receive the cash value of your account through annuities, lump-sum distributions, or periodic withdrawals, all of which are available through the investment providers.

If your employer provides incidental death benefit coverage and you die in service with at least one year of service credit a payment equal to your current annual earnable compensation will be paid to your designated beneficiary. If your death is the result of a job-related injury, the one-year requirement is waived.

 

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