POLICEMEN’SPOLICEMEN’SANNUITY & BENEFIT FUND, ANNUITY & BENEFIT FUND, CHICAGOCHICAGO

Welcome . . . .2011 Retirement SeminarPresented byJohn J. Gallagher, Jr.Executive Director

When Should I Retire? The most appropriate time to retire . . .

Any date that is suitable to you.

The most practical date to retire . . .

The fund recommends a resignation date the close of business (cob) on the 15th of any month. Your first pension check will be disbursed 6 weeks thereafter.

What do I need to Retire? A printed copy of your PAR form and Exit

Interview is required. Documentation on file should include:

Certified Copies of (County issued) marriage certificates, birth certificates, divorce decrees, death certificates, et al.

Social Security Numbers: All dependants that will continue on

your health care coverage.

What is the Process?Application process takes one hour or less.

2 - 4 weeks prior to your last day plan on visiting our office (Appointments required).

221 N. LaSalle Street - Suite 1626 Application By Appointment 312-744-3891 (Pax - 0357 or 0358)

Annuity Calculation Formula Annuity = combination of

age & service + 4 year average salary *

Effective date of annuity = Age 50 or later

20 years = 50% of 4-year average salary

2 &1/2 % for each year of service thereafter One day past your anniversary date of employment constitutes a full year of service

29 years & 1 day = maximum of 75% 30 year rate

* Average Monthly Salary

• Highest 4 consecutive years out of the last

ten years of service

• Based on wage grade and step rate

• Includes duty availability

• If Exempt, you must have been compensated

three out of the last four consecutive years based

on the exempt rank salary schedule.

Sample Annuity Benefits Police Officer retiring June 30, 2011 based on the

following Years of Service:

Years of Final Avg. Percentage of Accrued

Service Salary Final Avg. Salary Monthly Benefit

30 $7,110.25 75.00% $ 5,332.69

25 $6,917.18 62.50% $ 4,323.24

20 $6,679.68 50.00% $ 3,339.84

Note, the maximum rate (step 11) affects only those members attaining 30 years of service prior to January 1, 2006.

Example of an Annuity

Employee hire date: 06/09/1986

Employee retires: 06/15/2011 (cob)

Annuity effective: 06/16/2011

Employee Date of Birth: 02/22/1954 ** Prior to 1/1/1955

If unmarried on date of resignation a spouse accumulation refund is due.

4-Year Average Salary

2011 6 months @ 6,906.5 = 41,439

2010 12 months @ 6,771 = 81,252

2009 12 months @ 6,704 = 80,448

2008 12 months @ 6,572.5 = 78,870

2007 6 months @ 6,381 = 38,286

$320,295

Total Salary to Apply for Average

Wage and Grade salary applied = $320,295.00

Plus duty availability salary = $ 11,730.00

Total pensionable salary = $332,025.00

48 months

4 year average salary * = $ 6,917.19

Service Accrual Table

AGE mandatory

SERVICE 50 51 52 53 54 55 56 57 58 59 60 61 62 63

20 50 50 50 50 50 50 50 50 50 50 50 50 50 50

21 52.5 52.5 52.5 52.5 52.5 52.5 52.5 52.5 52.5 52.5 52.5 52.5 52.5 52.5

22 55 55 55 55 55 55 55 55 55 55 55 55 55 55

23 57.5 57.5 57.5 57.5 57.5 57.5 57.5 57.5 57.5 57.5 57.5 57.5 57.5 57.5

24 60 60 60 60 60 60 60 60 60 60 60 60 60 60

25 62.5 62.5 62.5 62.5 62.5 62.5 62.5 62.5 62.5 62.5 62.5 62.5 62.5 62.5

26 65 65 65 65 65 65 65 65 65 65 65 65 65 65

27 67.5 67.5 67.5 67.5 67.5 67.5 67.5 67.5 67.5 67.5 67.5 67.5 67.5 67.5

28 70 70 70 70 70 70 70 70 70 70 70 70 70 70

29 72.5 72.5 72.5 72.5 72.5 72.5 72.5 72.5 72.5 72.5 72.5 72.5 72.5 72.5

30+ 75 75 75 75 75 75 75 75 75 75 75 75 75 75

Step 1 Find your age column Step 2 Find your years of service Step 3 Find service accrual percentage from tablePlease note you need only work one day into your next year of service to qualify for an additional 2.5%, until you reach the maximum 75% service accrual.

29 years and 1 day = 30 years of service accrual calculation = 75% max.

Service Credit Calculation

Date of Resignation 2011 - 06 - 15

Date of Hire 1986 - 06 - 02

Gross Service Credit 25 - 00 - 13

Less Lost Time 00 - 00 - 05

Net Service Credit 25 - 00 - 08Formula @ 20 years = 20 - 00 - 00 = 50%

Years over 20 (5+) = 6 x 2.5 = 05 - 00 - 01 = 15%

Maximum % Service credit allowed 65%

Service + Salary48 month average salary * =

$6,917.19Service Credit % X 65%Awarded Annuity =

$4,496.17per month

Automatic Increase (COLA)

Calculated on Base annuity If born before 1/1/1955 (3%) = $134.89 If born after 1/1/1955 (1.5%) = $ 67.44

This example individual would receive the first increase 07/01/2012

Automatic Increase (COLA) If born prior to January 1, 1955:

3% of the base annuity the first of the month following attainment of age 55 or first anniversary of retirement, whichever comes later, each January 1st thereafter, for life.

If born after January 1, 1955:

1.5% of the base annuity first of the month following attainment of age 60 or first anniversary of retirement, whichever comes later, payable for 20 years.

Spouse AnnuityAward is 1/2 of annuity the retiree is receiving at

the time of death, including all cost of living increases accrued.

EXAMPLE:Base monthly annuity = $ 4,496.171st increase = $ 134.892nd increase = $ 134.89Monthly Annuity @ death = $ 4,765.95Award to spouse = $ 2,382.98 per month

Retired & UnmarriedYou will receive a refund of the spousal portion

of your contributions

10% penalty no longer applies to public safety personnel, Pension Protection Act of 2006

All are subject to mandatory 20% withholding, unless rollover election is chosen

(highly recommended)

Death Benefit Directive

Paid for with the $1.25 payroll deduction Will be reviewed and updated during

retirement application processPayable to person(s) you designate, no

restrictionsValue is set at $6,000.00 at retirementYour contributions reduce the tax liability to

the beneficiariesMay be changed at any time

Calculation of Taxable Amountof your Annuity - Safe HarborInvestment in Contract = $ -0- *Retired after 1986, thereforeFully Taxable with 1st annuity payment Disbursed: August 1, 2011

* Investment in contract are contributions made prior to 1/1/1982, which reduces the amount of your annuity that is subject to federal income tax by a predetermined, actuarial, amount.

Currently, Exempt from Illinois State Tax

Pension Protection Act

May allow for tax-deferral of insurance premium deductions, up to a maximum of $3,000.00 for all types of insurance coverage. Applies only to the retired employee, widows are excluded.

ELIGIBLE PREMIUMS PAID: Annuitant Healthcare Plan Long-Term coverage premiums Dental & Vision premiums

Group Health Benefit The City shall offer group health benefits to annuitants and their

eligible dependents through June 30, 2013. The city shall pay 50% of the aggregated costs of the

premiums, Until June 30, 2013, the board shall pay to the city on behalf

of each of the Fund’s annuitants who chooses to participate in the city's plan the following amounts:

$95 per month for each such annuitant who is not qualified to receive Medicare benefits,

$65 per month for each such annuitant who is qualified to receive Medicare benefits.

The city shall advise the board of all proposed premium increases for health care at least 75 days prior to the effective date of the change, and any increase shall be prospective only. 

Impact on Annuity of PPA 2007Up to a maximum of $3,000.00 can be deferred per year for any premiums paid

Tax savings: Based on a 15% tax bracket,

maximum of 3,000 x 15% = $450.00 per year

Based on a 28% tax bracket

maximum of 3,000 x 28% = $840.00 per year

IRS Guidelines due before implementation

Additional Comments● Any retroactive salary adjustments will be pensionable and all annuities will be adjusted retroactively

● Changes on State Pension Laws

● Changes in Federal/State Tax Law - PPA07

● Annuitant Healthcare Plan

● Changes in marital status

● Free Retirement planning tools @ fidelity.com & troweprice.com

● Retirement Calculator on our website

SummaryVisit the Fund office: 2 - 4 weeks prior to effective date Work close of business 15th of any month Bring any and all certified documents Application process is an hour or less Watch for Award Letter Use Direct Deposit Enjoy Your Retirement, You Earned It!

www.chipabf.org

Addendum's● Reversionary Annuity

● Refund Information

● State Income Tax Policy Chart

● QILDRO’s (Court Orders pertaining to Divorce)

● Current Board Members

● Key Phone Numbers

● Document Check List