Teacher and Employee Retention (TERI) Program - Class Two Members Only
If you are an active SCRS member who is eligible for service retirement, you may elect to participate in the Teacher and Employee Retention Incentive (TERI) program when you complete your application for service retirement.
TERI participants employed by an agency that adheres to state personnel policies will be exempt from the State Employee Grievance Procedure Act. This means your employment as a TERI participant is at will. If a TERI participant works for an employer that is not governed by state personnel policies, the TERI participant would be subject to his employer’s policies regarding employment status and rights.
How the TERI Program Works
TERI participation allows you to retire and begin accumulating your monthly annuity on a deferred basis without terminating your employment. During your TERI period you will pay the same pre-tax contribution rate as active members for the duration of your TERI period; however, you will not earn service credit or interest on your account.
Your monthly annuity is accumulated in your TERI account. No interest is paid on the benefits accumulated in your TERI account. Retiree benefit adjustments are applied to a TERI participant’s monthly annuity in the same manner in which other retirees receive such adjustments. You may participate in TERI only once. If you retired previously and received a service or a disability retirement annuity from SCRS, you are not eligible to participate in the TERI program. However, disability retirees who repaid all of the benefits they received and were restored to active membership are eligible to participate in the TERI program. Participants of the TERI program are not eligible for a disability retirement annuity.
If you die during your TERI participation period and your employer provides the incidental death benefit, your beneficiary may be entitled to a payment equal to one year’s earnable compensation. If you die while participating in TERI, in addition to any eligible incidental death benefit, the total amount of your benefits accumulated in your TERI account will be distributed to the beneficiary designated for your retirement benefit. A designated beneficiary who is a spouse may roll over the taxable portion of the TERI balance into an IRA, a 401(k) plan, a 401(a) eligible plan, a 403(b) plan, or a 457 plan. A non-spousal beneficiary may roll over the taxable portion of the TERI balance into an inherited or beneficiary IRA only.
At the end of your TERI period, you must terminate employment. Confirmation of your actual termination date is required from your employer. You may then receive the balance in your TERI account through either a taxable, single-sum distribution payable directly to you or through a tax-deferred rollover into a qualified retirement plan. Any distribution paid directly to you is subject to ordinary federal and state income taxes and may be subject to an additional 10 percent federal penalty for early withdrawal.
Unused Annual Leave and Your AFC
The initial annuity payments posted to your TERI account will be based on information received up to that point because your account is considered to be estimated. After your employer submits your final earnable compensation information, retirement contributions for your 12 highest consecutive quarters of earnable compensation will be audited. Your benefit may be adjusted accordingly after the audit to include service credit for up to 90 days of unused sick leave only. Your account will remain in this status for the duration of your TERI period. Upon termination of employment at the end of your TERI participation, your annuity will be recalculated by increasing your AFC to include payment for up to 45 days of unused annual leave paid at termination, divided by three.
Returning to Covered Employment after TERI Participation
If you plan to return to work for a covered employer after your TERI period ends, you must consult with your employer regarding your employer’s employment severance and return-to-work policy. You are not guaranteed employment; a covered employer decides whether or not to hire you after your TERI period has ended. Regardless of your TERI retirement date, if you return to work after your TERI participation has ended, you will make employee contributions.
TERI Program to Close June 30, 2018
Initially, TERI participants could defer receipt of their retirement annuity for up to 60 months; however, the TERI program will be closed effective June 30, 2018. Class Two members who enter the TERI program after July 1, 2013, will not be eligible to participate in TERI for the full 60 months. Instead, their TERI participation will end on June 30, 2018, regardless of when they entered the program. For example:
- A member who begins his TERI participation on July 1, 2013, will be eligible to participate in the TERI program for five full years before the program is closed on June 30, 2018.
- A member who enters the TERI program on July 1, 2014, will only be able to participate in the program for four years before the program is closed.
- A member who decides to enter the TERI program on June 1, 2018, will be eligible to participate for 30 days before the program is closed on June 30, 2018.
The TERI program is not available to Class Three members.