In This Issue (All Members):
Legislative Update, Disability Retirement Applications
Teacher and Employee Retention Incentive (TERI) Program Still Intact
Eligible Retirees Receive COLA
Legislative Update
Disability Retirement Applications
Legislation was enacted to allow the South Carolina Retirement Systems to accept a disability retirement application from an otherwise eligible member if the application is received by the Retirement Systems within 90 days of the member’s date of termination from employment.
Active contributing members of the South Carolina Retirement System (SCRS) and the Police Officers Retirement System (PORS) may apply for disability retirement if they meet certain eligibility requirements, one of which is that they still be in service with an employer covered by the South Carolina Retirement Systems. For disability application purposes, a member is considered to be in service on the date the application is received by the Retirement Systems if he is not retired and the last day he was employed by an employer covered by the Retirement Systems occurred not more than 90 days prior to the date of filing.
The Legislation applies retroactively to any application for disability retirement benefits filed on or after May 12, 2008, the date on which a decision was issued by the South Carolina Supreme Court that changed the Retirement Systems’ longstanding interpretation of the disability retirement statutes. A member’s disability retirement application will be rejected if it is received by the Retirement Systems more than 90 days after the member’s last day of employment with an employer covered by the Retirement Systems.
Incidental Death Benefit
The South Carolina General Assembly passed legislation that modified the group life insurance benefit provided by the Retirement Systems. The legislation removes all references within the statute to “insurance” and “premiums,” and replaces them with “benefit” and “contributions.”
The most significant change, however, involves the treatment of the death benefit payment to beneficiaries. This benefit will no longer be considered life insurance proceeds. The benefit will now be treated like any other lump-sum distribution paid by the Retirement Systems. This means that the distribution paid to a beneficiary of an active or retired member who dies on or after July 1, 2010, will be subject to state and federal taxes. It also means that the death benefit payment will be eligible for a tax-deferred rollover into another qualified retirement plan.
These changes were necessary to not only keep the Retirement Systems in compliance with the Internal Revenue Code, but to also ensure that our members are not taxed on the premiums paid by their employers for the death benefit. In other words, if the death benefit continued to be considered life insurance proceeds, then certain members would have to pay income taxes annually on the premiums paid by their employer.
If you have any questions about this change, please contact the Retirement Systems’ Call Center at 803-737-6800, toll-free at 800-868-9002 (within SC only), or at www.retirement.sc.gov
Teacher and Employee Retention Incentive (TERI) Program Still Intact
The General Appropriations Bill proviso number 89.109 which would have closed the TERI program was deleted by the Senate. Since this proviso was unsuccessful, no changes were made to the TERI program during this legislative session and TERI will continue to be available to members.
Got the 411?
You do if you subscribe to the South Carolina Retirement Systems' RSS feed. It's the fastest and easiest way for you to stay up-to-date on all the latest news and updates from the Retirement Systems. By subscribing to this feed, you'll receive an e-mail from us when something occurs that you need to know about, such as when a publication, like the Popular Annual Financial Report, is updated, when there is a legislative change, a form change, etc.
Visit our website at www.retirement.sc.gov and sign up today.
Eligible Retirees Receive COLA
Eligible retirees of the South Carolina Retirement System (SCRS) and the Police Officers Retirement System (PORS) received a 2 percent cost-of-living adjustment in their benefit checks effective July 1, 2010.
Each July 1, eligible SCRS and PORS retirees should receive an automatic cost-of-living adjustment (COLA) equal to the percentage of the annual increase in the CPI-W as of the previous December 31, up to an increase of 2 percent.
If the CPI-W is less than 2 percent, the COLA should equal the percentage of the actual increase in the CPI-W. COLAs are awarded only during periods of inflation, so no COLA will be awarded if the CPI-W is negative.
If you are an SCRS retiree and retire under the early retirement provisions at age 55 with 25 years of service, you are not eligible for COLAs until the second July 1 after you reach age 60 or the second July 1 after the date you would have had 28 years of service credit had you not retired.